Question: I am a licensed real estate broker who is interested in selling mobile homes. Are there any restrictions on my ability to sell mobile homes in the State of Colorado?
SHORT ANSWER:
Yes. The Colorado Division of Housing ("Division") requires any person who is engaged in the sale of mobile homes to register with the Division. However, Real Estate Brokerages may request an exemption from the registration requirement by contacting the Division and requesting an Exemption Letter. Once granted, the Exemption Letter exempts all REALTORS® in the Brokerage from the registration requirement.
DISCUSSION:
There are two different entities whose rules regulate the sales of mobile homes in the State of Colorado: 1) the Colorado Real Estate Commission ("Commission"); and 2) the Colorado Division of Housing. Depending upon the nature of the transaction, it will be governed either solely by the rules of the Commission, or both by the rules of the Commission and the Division. At the outset, it is important to distinguish between the sale of a mobile home that has had its title purged from the records of the Department of Motor Vehicles and is permanently affixed to real property, as opposed to the sale of a mobile home that has not had its title purged and has not been affixed to real property. This distinction is imperative, as it will determine the licensing and registration requirements for the REALTOR® who is brokering the mobile home transaction.
Purged Title:
Where title to the mobile home has been purged and the unit has been permanently affixed to real property, the transaction will be regulated by real estate license law and the rules of the Colorado Real Estate Commission. The Colorado Real Estate Manual provides, "[w]hen engaging in the sale of mobile or manufactured homes, real estate brokers are subject to compliance with license law and the rules of the Real Estate Commission." Colorado Real Estate Manual, 14-14 (July 1, 2005). Additionally, the Colorado Division of Housing requires registration of persons who engage in the business of selling manufactured homes (mobile homes) in Colorado under the Colorado Consumer Protection Act. The relevant statutory provision dictates that "[a]ny person whose business involves the sale of manufactured homes shall be required to register with the division [of Housing] before engaging in the business of selling manufactured homes in Colorado." Colorado Revised Statute ("C.R.S.") § 24-32-3323(1) (2005).
However, section 24-32-3323(4)(b) provides clarification regarding what is actually considered to be the sale of a mobile home, stating that "a person is not engaged in the business of selling manufactured homes if the person sells a manufactured home in the course of engaging in activities that are subject to the provisions of article 61 of title 12 [i.e., activities that would require a real estate license]." C.R.S. § 24-32-3323(4)(b) (2005).
Therefore, if a REALTOR® sells real property in conjunction with a mobile home whose title has been purged and is permanently affixed to the real property, then the transaction will be considered one that is subject to the provisions of Article 61 of Title 12; it will not fall under the coverage of C.R.S. § 24-32-3323(1), thus eliminating the need to register with the Division. Simply put, the sale will be treated as the sale of real property upon which improvements have been made, and will be governed by real estate license law and the rules and regulations set forth by the Commission.
Title Has Not Been Purged:
Alternatively, if the REALTOR® sells a mobile home that has not had its title purged and has not been affixed to real property, i.e., the sale of a mobile home that still may be moved to another location, then this will be considered an activity that requires registration with the Colorado Division of Housing. The registration requirement is significant because C.R.S. § 24-32-3324 sets forth an escrow and bonding requirement that any individual who is required to register must follow when selling a mobile home. The statute specifically provides that:
(1)[a]ny person required to register with the division [of Housing] pursuant to section 24-32-3323 shall escrow all manufactured home sale down payments in a separate fiduciary account in a bank or trust company that does business in the state of Colorado until the manufactured home is delivered to the purchaser; [and] (2) a person required to register with the division [of Housing] pursuant to section 24-32-3323 shall provide a letter of credit, certificate of deposit issued by a licensed financial institution, or surety bond issued by an authorized insurer in the amount of fifty thousand dollars and conditioned upon the person's refund of any home sale or down payment in accordance with the terms of contract pursuant to which the payment was received.
C.R.S. § 24-32-3324(1) (2005). Thus, if the sale of the mobile home is a transaction that requires the REALTOR® to register with the Division, the REALTOR® must also comply with the escrow and bonding requirements.
However, the Division has set up a procedure whereby REALTORS® who would be required to register with the Division may request an exemption from the registration requirement, thereby escaping the bonding and escrow requirements set forth by the statute. To request a registration exemption, a Real Estate Brokerage must submit a written request to the Division, on company letterhead and signed by an officer of the company, specifically requesting an exemption. The Division will grant the exemption in the form of an "Exemption Letter," thereby exempting all of the REALTORS® in the Brokerage from the registration requirement.
Jonathan Sargent is an attorney in the law firm of Frascona, Joiner, Goodman and Greenstein, P.C. His practice areas include , Securities, Corporations, and Real Estate. He can be reached at contact Jonathan Sargent.
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