Dealer Licensing - Posted by Chuck (AZ)

Real Estate Investing Mobile Homes & Mobile Home Parks
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Posted by JHyre in Ohio on March 05, 2002 at 16:54:23:

I don’t think that Steve was saying that a business license protects one from liability. Rather, he’s saying that holding MH’s in relatives names is a bad idea. Given how litigious mobile home people are in general, I must agree.

Now, does a lack of a business license keep one from holding MH’s in LLCs or the like? No.

But if the feces hits the rotating blade device, will lack of a license make a judge more likely to pierce the veil? Probably. How much more likely? Dunno, that’s a pretty hard thing to measure. I suppose I’d want to know how much hassle it takes to get the @#%&! license, as opposed to my perception of risk for not getting one…and that perception will turn, to some degree, on my personal tolerance for risk. You, for example, seem to have a pretty high tolerance for risk and a low opinion of dealer laws (the latter is probably justified in many states). So you don’t fret over it much. Others are really bothered by that sort of thing.

Get a license? Depends on how stiff the penalties are for not having one and how hard they are to get in one’s jurisdiction. In Ohio, the first offence is a warning and the license is hard and expensive to get. Most Lonnie Dealers here do not bother. My perception of licensing in Texas when I was there is the opposite- the law has teeth and the license is not too hard to get. I’d get one if I were in Texas.

But hold mobile homes in relatives’ names? Only for certain very unpopular family members!

John Hyre

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Dealer Licensing - Posted by Chuck (AZ)

Posted by Chuck (AZ) on March 02, 2002 at 18:43:17:

I received a e-mail yesterday in regard to the “hot” topic of the week here… dealer licensing.

— begin —

Chuck,

I’m in Vegas, and noticed your reply to Scott on the forum you wrote:

You don’t qualify to be a dealer, as the law/statutes define it… therefore you’re a private individual, conducting private business. I wouldn’t be concerned with a business license either (I wasn’t), but if you “go deep”, I’d definitely look into an LLC to protect your assets (I did). Bonus point - there are no usury laws in NV.

I was just wondering why you felt Scott didn’t need a dealer’s or business license? My situation is similar to his – do you think that I could get by without one – for a while, or even altogether?

Do you think this would create a liability for me, or would it cause trouble for me if I didn’t get one – what more can you tell me?

Thanks.

— to which I replied —

The defination of a “dealer” as used in the statutes of every state in the union is intended to mean — one who has a sales lot and several models on display, and possibly
employing several salespersons. In other words… a “mobile home dealer-ship”.

Unfortunately… the language used is broad and open to mis-interpetation, which results in mass confusion as to the “need” for a dealer’s license. Your simply a private individual, who’s conducting small business transactions (lonnie-deal’s).

The -only- reason that I have a business license, is because I own several mobile home parks. I also have a note brokerage… so I’ve placed all my businesses under a Nevada LLC for personal and financial, protection and benefit.

— end —

So with this in mind, go review your state’s statutes on the subject and base your actions accordingly. I think you’ll find however, that this will apply in most cases.

It’s still called common sense.

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Dealer Licensing in the rain - Posted by Steve W (WA)

Posted by Steve W (WA) on March 03, 2002 at 10:44:25:

Here in the home of liquid sunshine (and for our dry and arid neighbors to the east and south), I looked up the state codes (RCWs) that define and describe the requirements, and penalties.

I looked for the loopholes, the wording, and the intent, as described.

I found that buying for the purpose of and then subsequently carrying through on the act of selling (Whew!)five or more MHs, whether titled in the seller’s (corp, trust, individual, etc) name *OR NOT . . . requires licensing. So after number four, you cannot claim ignorance going into #5. One could claim duh for the first four, but the law pretty clearly states (and I am looking for an out here, but not finding it) its position.

Penalties? I read somewhere a few weeks ago that it was up to $100 per year. Not so. Violating dealer licensing requirements (curbstoning) is punishable by up to $5000 and one year in jail

PER OFFENSE!

Thank you, I’ll spend my $500 and get a dealership to carry my sign.

Links:

Defining terms:

http://search.leg.wa.gov/wslrcw/RCW%20%2046%20%20TITLE/RCW%20%2046%20.%2070%20%20CHAPTER/RCW%20%2046%20.%2070%20.011.htm

Penalties:

http://search.leg.wa.gov/wslrcw/RCW%20%2046%20%20TITLE/RCW%20%2046%20.%2070%20%20CHAPTER/RCW%20%2046%20.%2070%20.021.htm

The overall RCW listing as pertaining to this issue:
http://search.leg.wa.gov/wslrcw/RCW%20%2046%20%20TITLE/RCW%20%2046%20.%2070%20%20CHAPTER/RCW%20%2046%20.%2070%20%20chapter.htm

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Re: Dealer Licensing - Posted by Ray - TX

Posted by Ray - TX on March 03, 2002 at 08:50:30:

Chuck,
You said: The defination of a “dealer” as used in the statutes of every state in the union is intended to mean — one who has a sales lot and several models on display, and possibly
employing several salespersons. In other words… a “mobile home dealer-ship”.

Unfortunately, in Texas the last legislature pinned us down. We have ‘manufacturers’, ‘retailers’, ‘salespersons’, ‘brokers’, and a couple other classifications for people who move or install MH’s.

A retailer is any person who sells two or more MH’s in a 12 month period. No language about needing a display lot in the statute. The license is not really a big deal, but the surety bond of $50,000 is. Gotta have one for each location where a home is offered for sale, and the statute defines a ‘location’ as anywhere that a MH is offered or shown to the public. That can cramp your style in a hurry if you’ve got a couple MH’s on the market at the same time in different parks.

The worst part is that the statute specifically states that a deal done without a license is void and unenforceable.

On the good side, the business is booming, so I’ll just try to stay legal and have some fun.
ray

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Re: Dealer Licensing in the rain - Posted by lyal

Posted by lyal on March 03, 2002 at 13:42:47:

Steve,
I hate to belabour this but…do realtors sell mobile homes in your area? (I’m betting they do the same as everywhere else). Do you have a friend, acquaintance, or relative that is a “part time” realtor? If not could you “encourage” your spouse, brother, sister,whatever… to get a realtor’s license (pretty easy to do in my state. Class, test, done…) so they could “close” the transactions for you (an hour’s work at most…100 bucks or so??) after you have done all the work to set it up? A little work on your part to be sure. You need to learn the details of what is required. In my state there is a safety disclosure, FCRA disclosure (info on the actual interest rate) etc but it’s doable.
At the worst, can you approach a local dealership with the same offer? Might cost you a little more but you just build that in to your acquisition price when you buy.
Lyal

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Re: Dealer Licensing - Posted by EWest (MI)

Posted by EWest (MI) on March 03, 2002 at 12:18:15:

If I am correct, I don’t believe that the surety bond actually costs $50,000. I also believe we need one of those in MI and if I recall correctly it was only $100-150 but I am going to check again real quick.

OK, I decided to go and check real quick to see what Michigans law was…In Michigan you need a 10K surety bond or a $10,000 cash deposit but I could not find out what the surety bond costs…

EWest

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Re: Dealer Licensing - Posted by Chuck (AZ)

Posted by Chuck (AZ) on March 03, 2002 at 09:32:03:

The defination of a “dealer” as used in the statutes of every state in the union is intended to mean — one who has a sales lot and several models on display, and possibly employing several salespersons. In other words… a “mobile home dealer-ship”.

The key word in my quote is “intended”… not the word “dealer”. Look at it in the context that it was “intended”, and you understand what they’re trying (incorrectly) to say.

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cost analysis - Posted by Steve W (WA)

Posted by Steve W (WA) on March 04, 2002 at 07:47:03:

Seems ok, unless I want to do more than 5 deals in my first year (5 x $100 = the cost of a license anyway) or more than 2.5 deals per year subsequently ($250 = cost of license renewal). And change (cost of a $30K bond).

And “closing?” Uh, sign here and here. And maybe here. Then a trip to the courthouse for a 20 minute errand.

I appreciate the creative thought. That’s what success is all about. Thanks, and much respect to you, Lyal.

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WA living with in the law with 32 - Posted by investorrob

Posted by investorrob on March 03, 2002 at 18:57:54:

Steve:
I don’t know about you but I have 6 in my family and 2 in-laws 4x8 = 32. Think I will wait for a few years before I get my Dealer’s lic.

investorrob

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Re: Dealer Licensing - Posted by Ray - TX

Posted by Ray - TX on March 03, 2002 at 12:35:30:

No, we don’t have to put up the full $50k. We can buy the bond from an insurance company for a few points of the face value. I’ve seen a couple of posts here about getting the location of the bond and the license moved from one address to another. After they sold one home and acquired another one. If you have several homes on the market at the same time, though, it seems like you’d have to have a separate bond for each location.

Somebody please let me know if that’s correct.

ray

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Could you elaborate more? - Posted by Marty

Posted by Marty on March 03, 2002 at 12:25:28:

You say that “dealer” is “intended” to mean one who has a sales lot and several models on display, and possibly employing several salespersons.

Although according to our common sense, I believe this to be correct, is there verifiable, direct evidence someplace which supports this?

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Re: Dealer Licensing - Posted by Ray - TX

Posted by Ray - TX on March 03, 2002 at 12:22:20:

Hey Chuck,
I wasn’t trying to nitpick your post. Just wanted to let folks know that Texas wrote the statute so that it includes individuals as well as dealers with lots. Don’t know what they intended, but seems like they wanted to get us under regulation too.

There’s been a lot of discussion about the new Texas law on this board, but it’s been a while since I’ve seen any. I don’t like it. I think they are going overboard. Bureaucracy going crazy. Sometimes what the legislators intend and what they write are not the same. Don’t know if that’s the case here, but the bureaucrats got turned loose to protect the consumers.
ray

13

Re: cost analysis - Posted by lyal

Posted by lyal on March 04, 2002 at 11:22:06:

Steve,
I’m glad that its relatively easy to get the dealer license in your area. In some states there are tough to meet requirements (2 yrs sales experience with a licensed dealer in my state…can you say dealer lobby??) and the cost for the license is in the thousands.
The idea of using a realtor as a closing agent is more targeted to those people who are viewing the dealer licensing issue as insurmountable. Just to make the point that there is NO excuse not to jump into this business. If you are he!! bent on obeying all the rules, there is still a way to get started NOW. The only decision left is whether or not you have the self confidence necessary to solve the problems you will encounter.
All the best, Lyal

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yeah, but there is that asset protection thing - Posted by Steve W (WA)

Posted by Steve W (WA) on March 04, 2002 at 07:41:04:

so, purchases and notes are held in the names of individuals? loved ones? and if litigation ensues because your Potential-Buyer Betty trips on the stairs and breaks her kneecap, your child/wife/in-law(s) are personally liable? and then their house/car/bank account is . . . pfft?

Sorry, that almost seemed nasty, but yikes! I know probability is minimal, but I dunno about the other family members’ names deal.
Dealer Licensing might rather be worth the $500 “cost of doing business.” I find myself reciting that mantra all the time lately: “It’s OK Steve, that just the cost of doing business. the cost of doing business. the cost of doing business. . .”

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Re: Dealer Licensing - Posted by EWest(MI)

Posted by EWest(MI) on March 03, 2002 at 14:21:54:

First of all we all know all states are different, but my understanding was that you needed one for each different place of business, not for every home…or is that what you where saying? But I am not qualified to give any advice since I am just a beginner so as not to spread misinformation, I will suggest you read your state laws and hope a seasoned investor will answer

EWest

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Re: Could you elaborate more? - Posted by Chuck (AZ)

Posted by Chuck (AZ) on March 03, 2002 at 13:13:52:

Don’t know, don’t care… I’ve been operating without concern to it for almost 7 years now.

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Re: yeah, but there is that asset protection thing - Posted by Chuck (AZ)

Posted by Chuck (AZ) on March 04, 2002 at 11:36:10:

A business license isn’t going to protect you from a lawsuit.

Go talk to an attorney.

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r u sure yr name isn’t really . . . Charlie (AZ)? - Posted by Steve W (WA)

Posted by Steve W (WA) on March 04, 2002 at 07:51:36:

There is that whole flouting the law thing again - I am not being critical, but this is seriously reminiscent of the past Charlie discussion!

Power to you, bud.

(“Bud” . . . I love that!)