Buying a Manufactured Home: Warranties and How to Handle Issues After the Sell

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We are continuing our Smart  Buyer Series and focusing on the various warranties that may be offered to you while buying a manufactured home and also how to properly handle issues after the sell. 

We’ve previously covered how to avoid issues during a manufactured home purchase. We want to help you get the best deal and have the best experience possible while purchasing a manufactured home!

Buying a manufactured home is an exciting time! You’ve done a lot of research and made a lot of hard decisions to get the home you want. Once you picked the home out, secured financing and patiently waited for the delivery of the home, all the hardest stuff should be over, and it is for most people. However, there’s a small percentage of new homeowners that experience issues with their new homes. It’s a frustrating time to say the least.

Here’s a breakdown of consumer complaints recorded for each manufacturer, per 100 homes in Texas during one study year:

• Southern Energy 8.7
• Pioneer 6.9
• Cavalier 5.3
• Patriot 5.2
• Champion/Redmon 5.1
• American Homestar 4.6
• Schult 3.5
• Silver Creek 3.4
• Oakwood 2.5
• Fleetwood 2.2
• Clayton 2.0
• Palm Harbor 1.6
• Skyline 1.0
• Elliott .4

One Families Experience

I watched a close family member go through 2 years of utter frustration after buying a manufactured home a few years ago. The entire ordeal was maddening.

The home was special ordered and was going to be used as a base on which to build their ultimate dream home. They had bought property on top of a mountain and would be living there while they saved for the second stage of the build: building an A-frame addition onto the front of the home, adding a wrap-around deck and then wrapping it all in log siding.

Buying the manufactured home was a huge step in achieving their dream home. From the very beginning, there were many issues. In one corner of the master bedroom, there was a 1″ gap from ceiling to floor (though it did get closer toward the floor). The 2″ trim around the kitchen counter was broken and chipped but instead of the factory or dealership simply adding a new piece of trim, they glued the many small pieces together and left it. The largest issue began about 6 months after they moved in; a leak formed around the chimney and ruined the ceiling in the den. They paid to ensure the home was level and had professionals document the damage.

They did everything they were supposed to do but the manufacturer and the dealer had ultimately failed them. The dealer stated it was the manufacturer’s issue and the manufacturer stated it was the dealers. The additional insurance policy they had paid extra for, based on the glowing review of the salesman, never panned out either. After almost 2 years of trying, the family gave up, which in my opinion, was exactly what both companies wanted them to do.

Some Things to Remember about Home Building

Building any kind of home is not easy and even stick built homeowners have a high percentage of issues after completion. The Holmes on Homes TV Show is an epic example of that. They have thousands of people begging them on a weekly basis to fix their stick built home issues!

You absolutely deserve the home that you paid for and it should be of the highest quality but you cannot take the issues that you are experiencing personally. The employees that helped to build your home did not intentionally messed up. Construction is a finicky endeavor and even the most experienced carpenter make mistakes. Add several people trying to work in unison and you’re bound to have issues that lead to errors, both minor and major.

Manufactured homes have a very streamlined building process that reduces human error significantly. The factory and machinery are optimized down to the smallest nail and this is a much better environment for building homes. Still, mistakes happen. Of course, some manufacturers just drop the ball completely. Poor hiring, production oversight and/or neglected inspection processes allow homes to leave the factory that should not. This causes a lot of frustration for the homeowners.

With that said, I believe we should judge a manufacturer based on how quickly and efficiently the issues are remedied and not on the issues themselves. Nothing can be perfect, especially when humans are involved.

Home Warranties You May Not Need

There’s good warranties and not so good warranties available when buying a manufactured home.

The following is an extensive list of the different types of warranties that may be offered during the home buying process. Make sure to read everything and ask for clarification if you don’t understand something. Also, you’ll want those answers in writing.

If possible, look for a manufacturer that offers a long-term warranty with few exclusions. If the warranty is on 450 pages with small type, something is off. Inspect it thoroughly.

Manufacturers, retailers, installers, and component manufacturers may offer separate warranties, each of which covers a different part of the home.  Consumers can have trouble determining who is responsible if problems after the purchase.

In Consumer Unions survey, they noticed that mobile home owners who bought directly from the manufacturer had fewer problems with their homes than the owners that bought from an independent retailer or dealer.

When you buy directly from a manufacturer, a single company makes, sells, moves and installs your home. Dealing with a single company is always better than 2 or 3. Licensing laws in some states may prohibit direct to consumer sales by manufacturers though so check to see. Although many states require that mobile-home manufacturers offer warranties good for one year or longer, terms can extend to five years or even longer.

However, be sure to compare the coverage of a warranty, not just its length.  Many exclude “cosmetic” items – the definition of which can be a source of contention down the line. Some exclude important items such as wall cracks, leaky faucets, doors, and windows.  Others exclude problems caused by moving and installation – one of the most common sources of complaints. Ask for copies of the complete warranty to take home and compare against those offered on other homes. Look at the combined terms of all the warranties that cover a home.

Find out what voids the warranty

Sometimes moving or selling the home can void the warranty, as can improper site preparation. Ask the retailer or manufacturer to examine your lot and certify that your site preparation meets the standards required by the warranty.  Discover what, if any, regular home maintenance is needed to keep the warranty in force.

Beware of Extended Warranties

Be wary of “extended warranties.” These are often little more than high-priced insurance products issued by third-party companies. Terms of extended warranties may be different than the original warranty, so evaluate them closely. If you are financing the extended warranty, factor in the additional interest cost. Also, read every clause and every sentence. They have a tendency to have language in their policies that allow them to get out of paying claims easily.

Other Things to Consider When Buying a Manufactured Home

Watch out for Arbitration Clauses

Look out for arbitration clauses when buying a manufactured home. These contract terms limit your right to sue and are far more common in manufactured homes than conventional housing. Ask if the retailer, manufacturer, or finance company uses mandatory binding arbitration clauses in their contracts. If they do, find out the cost to file a claim and who gets to pick the arbitrator.  We advise consumers to avoid arbitration contracts that are both mandatory and binding.

Check the Companies Quality of Service

Get references from previous customers of the manufacturer and retailer.  Check more than one, preferably people who have been in their homes long enough to have experienced or used the warranty service offered.  You can also check the record of the manufacturer, retailer, and installer at agencies such as the state attorney general or the state manufactured housing agency.

This is probably the most important advice I can give you. Buying a manufactured home is difficult but it will be a lot more difficult if you deal with the wrong the people.

Escrow of Funds

Some consumers report delays in warranty service. If the retailer has already been paid in full, there is less incentive for prompt service. We recommend asking the lender to escrow (i.e. delay payment of) some of the funds for the house until the installation and initial warranty repairs are complete and inspected by a third party.

Beware of “Package” Deals

Shop around for each component of your package such as insurance, mortgage, etc. Dealers may offer to act as your real estate broker, insurance broker, and mortgage company, but he or she may not be able to offer you the best deal on these services.

You’re buying a manufactured home, not a financial advisor. If you need advice, go to licensed and bonded professionals that have no conflict of interest and doesn’t gain anything from your actions.

You pay for items in a package deal – prepaid park rent, insurance premiums, even furniture and stereo systems – by adding the cost onto your loan. This will cut into your equity in the home. Given the relatively high-interest rates on personal property loans, it will cost you more than the items are worth in the long run.

In particular, you will pay less for your property insurance if you buy it directly from an insurance company. If you buy it from the dealer, the cost of one to five years of coverage is typically added to your loan and you will pay significant interest on it. At the end of that initial policy, you will need to renew or replace your insurance at an additional monthly charge, while your monthly mortgage payments will not decrease.

Buying a Used Manufactured Home

Buying a Used Manufactured Home Used homes may have a very limited warranty or no warranty at all. Be wary of homes sold ‘as-is’ with no warranty – there may be hidden problems with the home. We advise you to have all used homes professionally inspected prior to any purchase commitment. With that said, buying a used mobile home can be an excellent choice. They are affordable, and as long as the bones or structure is healthy, they are relatively easy to remodel and update.

What to Do If You Experience Issues

If you have a problem soon after buying a manufactured home, it should be covered under your warranty. Here are the steps you should take to get the fastest results:

• Organize all your records and document your complaints.  Make a record of all conversations with retailers, manufacturers, and state and federal agencies from this point on.

• Contact both your retailer and your manufacturer. Contact information should be in the homeowners manual or other documentation provided at the sale. If you contact a party by phone, be sure to follow up with written notifications to both your manufacturer and retailer. Address the letters to specific people with specific titles to create a clear paper trail.  Include your name, contact information, and the label number of your home.  The label number can be found on a red seal issued by HUD and affixed to all homes built under their jurisdiction.

• Keep the letter brief and to the point. Include the date and place you made the purchase, who performed your installation, the serial or model number and warranty terms, what went wrong and any actions you have taken to correct the problem.

• Enclose copies of your records (store the originals in a safe place), including receipts, guarantees, warranties, canceled checks, contracts, and any other documentation.

• Send the letters by certified mail. Some states will require this as proof of notice.

• If service personnel attempt to perform work, but do not complete repairs to your satisfaction, do not sign off on service orders that state the job has been completed.

Where Else to Turn

All manufactured homes should be constructed to meet the federal building standards adopted and administered by the U.S. Department of Housing and Urban Development (HUD).

State Administrative Agencies

HUD generally contracts with state agencies (State Administrative Agencies or SAAs) to enforce the code and monitor complaints. If you cannot get your retailer or purchaser to perform the necessary repair work, you may wish to contact your SAA for a complaint form.

Contact information should be in your homeowner’s manual and is also available in the appendix to this report. Send the completed complaint form back to the SAA with dated copies of your correspondence with retailers and manufacturers and a copy of your purchase agreement. The agency will review your complaint and send an inspector or district representative out to your home. Follow up if the delay becomes unreasonable. If the agency declines to inspect your home, in some states you have the right to ask for, and receive, an inspection.

If the inspector finds your problem to be a result of a manufacturing defect, they will lobby both your manufacturer and retailer to remedy the situation. Even if your warranty has expired, some states will still force the retailer and manufacturer to compensate owners whose problems are the result of a manufacturing defect. Your state may even have a recovery fund with which to fix your problem if your retailer or manufacturer is out of business.

Used homes have shorter warranty periods, and your state may only have limited jurisdiction over them.  The SAA may also not address issues such as implied warranty and deceptive trade practices. Implied warranties are non-verbal, non-written guarantees that a product is fit to serve the purpose for which it was sold.

If the SAA directs the licensee to perform work and it is not completed to your satisfaction, tell the SAA. They may assume the work is completed and close your file if they don’t hear from you. If you have no success with your State Administrative Agency or HUD and you feel the regulatory system was not sufficient to address your problems, be sure to notify your state and federal elected officials.

Here are a few more places that can help you:

Better Business Bureau HUD – Complaints for Manufactured Homes

HUD – How and Where To File A Complaint 

In closing, manufactured homes get a bum wrap – some companies deserve the poor reputations, some don’t.

Not all manufacturers are bad and the manufactured housing industry is a perfect example of how a few bad apples can spoil the whole barrel. A few companies have gained quite the reputation for poor customer service, poorly made homes, terrible lending practices, and overall shady business practices. Leave those companies alone and focus on the companies that do what they should – build fine homes and treat customers right.

A little research and a few Google searches will net you the information you need to find the bad apples.

Thanks so much for reading Mobile & Manufactured Home Living!

Sources:

• Realty Times
• Consumers Union
• BBB
  HUD