All licensed dealers and brokers of mobile homes, manufactured homes or factory-built buildings designed for residential use (“modulars”) are required to be audited at least once every two years. Audits are conducted to ensure compliance with all applicable statutes and rules as they pertain to the sale of mobile homes, manufactured homes and/or modulars.
Audits are conducted by mail. Audit request letters identify the time period being reviewed, the names of the sales transactions, and the documents that the licensee must provide to the Department.
The dealer or broker is requested to provide the Department with legible copies of the following documents, as they pertain to the selected sales transactions, within twenty days from the date of receipt of the Department’s letter:
- Purchase contracts and/or Offers to Purchase;
- Listing agreements and all addenda to listing agreements;
- Proof that the unit sold was dealer-owned inventory at the time of the sale or identification that the sold used unit was a lender repossession;
- Manufacturer’s invoices, if new units, and proof the flooring company or manufacturer were paid;
- All applicable installer or contractor invoices as well as installers’ or contractors’ license numbers and license classifications OR a list of the agreed upon services the dealer/broker was to provide (i.e. setup, air conditioner, awning, etc) and the names, license numbers and license classifications of the installers/contractors who performed the work;
- All earnest monies receipts written by the dealer/broker;
- All title company or escrow company receipts;
- Evidence of the date and amount of proceeds and/or draws received from a title or an escrow company or a lender;
- All bank validated trust or escrow account deposit slips or copies of applicable trust or escrow account bank statements that identify names of consumers next to deposit information;
- Buyer’s Acceptance Forms;
- Final, dated settlement statements;
- Proof of consummation (i.e. evidence of how and when title or Affidavit of Affixture was conveyed to purchasers);
- Proof of the date that the home was delivered to the customer and installed if installation part of the contract;
- Properly signed off Manufacturer’s Certificates of Origin;
- Escrow instructions signed by all parties to the transaction;
- Written notice given to a buyer regarding the option to request that a title/escrow company be used and evidence that the seller accepted or denied this request;
- Final, dated settlement statements;
- Proof title company applied for title or Affidavit of Affixture;
- Proof that dealer applied for title or Affidavit of Affixture;
- Trust/escrow account withdrawal information (i.e. copies of applicable trust/escrow account bank statements identifying withdrawals of the earnest monies);
- If listed unit, proof that seller and/or lien holder were paid;
- If brokered transaction, agency disclosure statements signed by buyer and seller;
- If brokered transaction, buyer and seller closing statements;
- Dispute Resolution forms.
In addition to the above-listed items, the dealer or broker is requested to provide the Department with a newly signed/notarized Trust or Escrow Account Authorization form, a copy of the trust or escrow account signature card or account application form, a bank printout that identifies the balance in the trust or escrow account as of the date the dealer or broker prepares to mail the requested documents to the Department, and the balance in the trust or escrow account per the dealer’s or broker’s ledger (as of the date the dealer or broker prepares to mail the requested documents to the Department) which identifies the names of the purchasers with monies in the trust or escrow account, their deposit amounts, any outstanding checks, and the amount of dealer or broker monies in the account to offset service charges assessed by the financial institution. The dealer/broker must provide copies of all earnest monies receipts and copies of all bank validated trust/escrow account deposit slips that relate to those earnest monies that comprise the trust/escrow account balance.
If the dealer or broker requires additional time to comply with the audit due date, the dealer or broker must contact the Department’s auditor to make this request and to state the reasons for the delay. The licensee will be advised if the request is granted or not.
At the completion of the audit, the dealer or broker is sent an Audit Report. The Audit Report will advise the licensee of any cited violations and, if applicable, advise if additional documentation is needed in order to correct any of those cited violations. If it is determined that the cited violations warrant further action by the Department, the licensee will be advised of this.
If the dealer or broker has provided copies of sales documents to the Department, these copies will be shredded after the audit has been completed, provided there are no outstanding matters. If original sales documents were provided for the audit, the dealer or broker will be notified to pick up their records after the audit has been completed and after any outstanding matters have been resolved.
All dealers and brokers are required to read the “New Dealer Handbook”. The purpose of the Handbook is to provide guidance to new and established dealers and brokers in accordance with the statutes and rules of the Department. The Handbook discusses the documents subject to audit, the use of trust or escrow accounts, outlines acceptable evidence of consummation, provides additional information and requirements for some common types of sales transactions, advises the dealer or broker of what to expect when an audit is conducted, provides frequently asked questions and the answers to those questions, and provides forms and types of consummation referred to throughout the Handbook.