Fiscal impact reports (FIRs) are prepared by the Legislative Finance Committee (LFC) for standing finance

committees of the NM Legislature. The LFC does not assume responsibility for the accuracy of these reports

if they are used for other purposes.

Current FIRs (in HTML & Adobe PDF formats) are a vailable on the NM Legislative Website (legis.state.nm.us).

Adobe PDF versions include all attachments, whereas HTML versions may not. Previously issued FIRs and

attachments may be obtained from the LFC in Suite 101 of the State Capitol Building North.

F I S C A L I M P A C T R E P O R T

SPONSOR

Rodella

ORIGINAL DATE

LAST UPDATED

2/20/07

HB

1241

SHORT TITLE

Modular Housing Warranty Act

SB

ANALYST

C. Sanchez

APPROPRIATION (dollars in thousands)

Appropriation

Recurring

or Non-Rec

Fund

Affected

FY07

FY08

NFI

(Parenthesis ( ) Indicate Expenditure Decreases)

SOURCES OF INFORMATION

LFC Files

Responses Received From

Regulation and Licensing Department (RLD)

Attorney General’s Office (AGO)

SUMMARY

Synopsis of Bill

House Bill 1241 enacts the “Modular Housing Warranty Act" which would generally require

manufacturers, dealers, and installers of modular homes to each provide an express warranty to

the consumer. The bill prescribes the terms and length of those warranties, and requires the

Construction Industries Division of the Regulation and Licensing Department to enact rules

implementing the provisions of the act.

The bill defines "modular housing" to mean a building intended for residential use and designed

to be placed on a permanent foundation that is built in modules that are transported to the home

site on flat-bed trucks. The Construction Industries Division (CID) currently has authority to

inspect and certify modular homes. NMSA Sections 60-13-42F, 60-13-2L.

FISCAL IMPLICATIONS

The Construction Industries Division (CID) believes they will need more staff since they have

not budgeted to oversee the enforcement of this bill’s provisions.

House Bill 1241 – Page

2

PERFORMANCE IMPLICATIONS

According to the regulation and Licensing Department, CID is under a mandate to adopt

greenhouse emissions rules before the end of 2007. It will not be feasible to undertake the

rulemaking required by this bill concurrently. CID will, however, be able to include this

segment of the construction industries in its green building program, and to begin the process of

developing a new statutory and regulatory scheme that addresses the unique aspects of this type

of residential construction.

TECHNICAL ISSUES

The terms “dealer" and “installer" are not defined in the bill.

According to the Construction Industries Licensing Act, only licensed contractors may install

modular homes. CID does not have authority to regulate dealers or installers.

The CID further notes that the bill appears to be based on the Manufactured Housing Division’s

rules covering warranties required of their licensees. This model does not translate well to the

Construction Industries Division. For example, manufactured housing is regulated by federal

rules, and is more like a product than a process. Therefore, the concept of warranty as it is

described in the bill is a much better fit with manufactured housing that is subject to HUD

regulation, than it is with construction of conventionally built homes.

The bill requires that manufacturers, dealers and installers warranty appliances and equipment

provided by them. Unlike manufactured homes, modular homes are not required to be sold with

appliances already installed. CID’s authority is limited to construction. It has no expertise or

resources to oversee appliances or equipment that may or may not be installed at the time a

modular home is erected.

OTHER SUBSTANTIVE ISSUES

Other CID consumer protection legislation has been introduced this session. It is unclear whether

this bill would interfere with that legislation.

WHAT WILL BE THE CONSEQUENCES OF NOT ENACTING THIS BILL

Modular housing dealers and installers will not be mandated to warrant their products or

services.

CS/csd