PART 15 -- THE MANUFACTURER’S WARRANTY TRAP

The industry standard warranty policy is to disclaim all implied warranties, which includes the ‘implied warranty of merchantability’, and the ‘implied warranty of fitness for a particular purpose’.

• “Implied warranty of merchantability” – A warranty that the property is fit for the ordinary purposes for which it is used (Black’s Law Dictionary, Seventh Edition)

• “Implied warranty of fitness for a particular purpose” – A warranty implied by law if the seller has reason to know of the buyer’s special purposes for the property – that property is suitable for those purposes (Black’s Law Dictionary, Seventh Edition)

With this, and as noted earlier, the industry standard warranty policy does express that they will repair “substantial” or “serious’ defects in materials and workmanship.

In the joint industry FTC publication mentioned earlier, while never forthright admitting this solemn truth, the manufacturers warranty those aspects of the home’s design, construction, and performance (durability, quality, and safety), which are expressly covered by the MHCSS (See Appendix B—beginning on page 75—summary of 24 CFR Part 3280 – “The Manufactured Home Construction and Safety Standards”). The express preemption clause of MHCSS Act (42 USCA §5403(d)) states that:

• “Whenever a Federal manufactured home construction and safety standard established under this chapter is in effect, no State or political subdivision of a State shall have any authority either to establish, or to continue in effect, with respect to any manufactured home covered, any standard regarding the construction or safety applicable to the same aspect of performance of such manufactured home which is not identical to the Federal manufactured home construction and safety standard.”

Note 1: The underlined and/or bolded text was added herein for emphasis; however, no such emphasis appears in §5403(d) of the MHCSS Act.

Note 2: It should also be pointed out that in §5403(d) preemption applies on a per-home bases, hence, preemption is predicated upon Federal assurance that each such manufactured home complies with all-applicable MHCSS. The Secretary’s system of enforcement relies almost exclusively on the word of the regulated and those they employ, to assure the State and/or local jurisdictions of that manufactured homes comply with all applicable MHCSS.

The joint FTC/Industry publication does however state that the manufacturers warranties typically cover all structural elements, plumbing systems, heating, cooling and fuel burning systems, electrical systems, and any other components included by the manufacturer. This same language can be found in many State warranty statutes for manufactured homes, and in every manufacturer’s written warranty.

24 CFR 3280.1 of the MHCSS states:

• “This standard covers all equipment and installations in the design, construction, transportation, fire safety, plumbing, heat-producing and electrical systems of manufactured homes, which are designed to be used as dwelling units”.

Referencing Appendix B, even for a person unfamiliar with the intricacies of a building code, it should be evident that the MHCSS extensively cover every conceivable aspect of a manufactured homes’ design, construction, and performance related to all structural elements, plumbing systems, heating, cooling and fuel burning systems, electrical systems, and any other components.

It would be virtually impossible for a State to address under any State “warranty or warranty performance” statute or ordinance, defects in the structural elements, plumbing systems, heating, cooling and fuel burning systems, electrical systems, and any other components of a manufactured home, without addressing a construction or safety defect(s) applicable to some “aspect of performance” covered by the MHCSS.

With this understood, the States can only enforce “warranty or warranty performance requirements” (24 CFR 3282.11(c)) to the extent that such action does no more or no less than require the manufacturer, or any agent thereof, to bring the manufactured home into compliance with the MHCSS. More would be to impose “construction or safety standards upon mobile homes that differ in any respect from those established by HUD” [1], and less would not bring the manufactured home into compliance with the MHCSS.

The Secretary’s reference in 24 CFR 3282.11(c) to such State requirements is intended to lead people away from that which is embodied in the “manufacturer’s certification” – the manufacturer’s warranty of merchantability (not implied, but written). The manufacturer certifies that his or her manufactured home is free of “any defect in the performance, construction, components, or material of a manufactured home that renders the home or any part thereof not fit for the ordinary use for which it was intended” (42 USCA §5402(3)). Now look again at the definition at the beginning of this section, for “implied warranty of merchantability.”

If the manufacturer chooses to use the Secretary’s opt out method, thereby avoiding making a determination of a defect, and if the Secretary or SAA does not officially make such a determination under 24 CFR 3282.407, then by any rationale, the manufacturer’s compliance with the State’s warranty provision or requirement is strictly voluntary. Restated, to prove breach of warranty one must first impeach the manufacturer’s label of compliance because the manufacturers warranty and the MHCSS standards are inseparable. Under the Secretary’s contrived regulations, the manufacturer’s label is unimpeachable by any person, including himself, once the purchaser has taken delivery of such defective merchandise. This leaves the purchaser with little protection under State warranty requirements, in so much as the manufacturers simply warrant that which is expressly covered by the MHCSS. (Manufacturers Standard warranties for warranty coverage can be obtained from the Secretary of Housing by requesting copies of consumer manuals). This is why the manufacturers always seem supportive, or at least do not contest, manufactured home consumer representatives that chase state warranty laws believing that this is where the evil lies, and that this is the cure.

Remember that the Secretary will only require the manufacturer to correct defects that are in his opinion serious or substantial defects, and the manufacturers under their warranties will only correct what are in their opinion substantial or serious defects. This leaves the purchaser awaiting the accidental discovery of a class of manufactured homes that:

• Contain the same serious or substantial defect(s) or imminent safety hazard; due to an error in the design or construction by the manufacturer, before government officials will officially deem that a manufactured home contains any kind of a failure to comply with the MHCSS, and thereby, validate breach of warranty where the manufacturer has failed to remedy in good faith, such defect(s).

However, there are many cases where State courts have found breach of warranty by the manufacturer. Essentially, some State justices have been enforcing the MHCSS all along; it just does not appear from the opinions reviewed thus far that it was understood that by finding breach of warranty by the manufacturer, they impeached the Manufacturer’s certification of compliance (merchantability). Whether aware or not, the Courts nonetheless found that such manufactured home did not comply with all applicable MHCSS. The Secretary and Manufacturer’s silence in not contesting such decisions establishes that such enforcement by State Courts is a legitimate exercise of the State’s power. It has simply been more beneficial for the Secretary and his manufacturers to remain silent in this regard to prevent the significance of this from being understood.