Request By:
Brian Reeves
Reeves, Smith & Kimbel
741 East 12th Street
Bowling Green, KY 42101
Opinion
Opinion By: Steven L. Beshear, Attorney General; By: Kevin M. Noland, Assistant Attorney General
This is in response to your request for an opinion from this office concerning the applicability of the Mobile Home and Recreational Vehicle Act (MHRVA), KRS 227.550-.660, and the accompanying regulations, 815 KAR 25:010, to mobile home brokers. As you noted in your letter, the Act and the regulations (hereinafter collectively referred to as the MHRVA) impose several requirements on mobile home dealers. A dealer is defined as a person who sells or offers for sale three (3) or more mobile homes in any consecutive twelve (12) month period. As you indicated in your letter, a mobile home broker acts as an agent for the mobile home owner and sells the mobile home on the owner's behalf. Your question was whether a mobile home broker is considered a dealer for purposes of the MHRVA.
The purpose of the MHRVA is to protect the health and safety of the owners and occupiers of mobile homes from malmanufactured mobile homes. 815 KAR 25:010 Sec. 4(2). Accordingly, manufacturers are required to produce mobile homes that conform to specified standards. 815 KAR 25:010 Sec. 7. Furthermore, mobile home dealers are prohibited from selling any mobile home without a seal indicating its compliance with specified standards. 815 KAR 25:010 Sec. 11(2). New mobile homes must bear either a HUD label, showing compliance with the National Mobile Home Construction and Safety Standards, or a class "A" seal of approval obtained from the Office of the State Fire Marshal. A mobile home that does not have a seal must be inspected and certified by a dealer before he or she sells it to the public. 815 KAR 25:010 Sec. 11(2). Additionally, a mobile home taken in trade must be reinspected and certified, even though it already bears a seal. 815 KAR 25:010 Sec. 5(5). Finally, all used mobile homes purchased outside the Commonwealth of Kentucky must be inspected and certified by a dealer before the mobile home can be licensed, regardless of whether the mobile home purchaser was a dealer or an individual owner. 815 KAR 25:010 Sec. 5(7). See KRS 227.600; OAG 80-422.
Other than this final requirement of obtaining a seal on any mobile home purchased outside Kentucky, there are no duties of inspection or certification imposed on an individual owner who wants to resell his or her mobile home. Such duties instead are imposed on third parties who acquire mobile homes for resale purposes, i.e., who are engaged in the business of selling mobile homes. Therefore, in order to comport with the MHRVA, mobile home brokers should be considered subject to the Act as dealers in certain circumstances. As this office has stated before, a mobile home broker need not obtain a mobile home dealer's license if he or she is a licensed real estate home dealer's license if heor she broker and is selling mobile homes as real property (i.e., the mobile home is permanently affixed to the real estate). OAG 80-513. However, if a mobile home broker acquires for resale purposes ownership or possession of three or more mobile homes in any consecutive twelve month period, he or she must obtain a mobile home dealer's license and must comply with the requirements of MHRVA. A person who owns or possesses the goods that he or she is selling is not a true broker. One of the characteristics of a true broker is the fact that he or she is a "mere negotiator between other parties."
Sutton & Cummins v. Kiel Cheese & Butter Co., 159 S.W. 950, 951 (Ky. 1913). A broker does not act in his or her own name and does not have custody of the goods which he or she is employed to sell. Id.
There are several provisions of the regulation, 815 KAR 25:010, that support this interpretation. Section 9(10)(j) makes it grounds for revocation, suspension, or denial of a dealer's license for the dealer to fail to put the title of a mobile home in his or her name after he or she acquires ownership of the mobile home. Section 5(7) refers to all used mobile homes purchased outside the Commonwealth. Section 5(5) refers to mobile homes taken in trade. Section 11(2) requires any dealer who has acquired a used mobile home without a seal to inspect and certify it. These provisions imply an element of ownership of the mobile home on the part of the dealer.
Obviously, if a mobile home broker purchased for resale three or more mobile homes in twelve months he or she would constitute a dealer subject to the providions of the MHRVA. This would be the person engaged in the business of selling mobile homes that the MHRVA seeks to cover. However, it is our opinion that ownership is not the only basis on which a broker can be deemed to be a dealer. If a broker acquires possession for resale of three or more mobile homes, he or she becomes a dealer subject to the MHRVA.
Although neither the Act nor the regulations expressly provide that a person who acquires possession of mobile homes for resale becomes a dealer, such a conclusion is necessary in order to further the purposes of the MHRVA. A person who owns or possesses a mobile home for resale has the opportunity to inspect and certify it. Since the MHRVA focuses on the inspection and certification of new and used mobile homes, it is our opinion that the opportunity to inspect is an important factor in determining whether a person who is selling a used mobile home should be considered a dealer. Furthermore, it would not be unduly burdensome to requre a broker/ dealer who owns or possesses mobile homes for resale to maintain an established place of business, or to carry the requisite liability insurance. See 815 KAR 25:010 Sec. 9(10)(f) and (g).
It should be noted that once a person qualifies as a dealer, however, he or she is a dealer as to all mobile homes that he or she sells or offers for sale. In other words, a dealer cannot avoid his or her duties under the MHRVA by purporting to be merely a broker of a mobile home on behalf of an individual owner/ occupier in an isolated transaction. The duty to inspect and certify mobile homes is imposed on dealers. The MHRVA does not provide for transactional exemptions.
To summarize, a mobile home broker who acts as a "mere negotiator" between the mobile home owner and prospective purchasers is not considered a dealer under the MHRVA. However, if the broker acquires ownership or possession for resale purposes of three (3) or more mobile homes in any consecutive twelve (12) month period, the broker becomes a dealer subject to the provisions of the Mobile Home and Recreational Vehicle Act and accompanying regulations. Furthermore, once a person qualifies as a dealer, his or her duty to inspect and certify mobile homes applies to all mobile homes that he or she sells or offers for sale. There are no transactional exemptions.