Modular housing, meeting certain home construction standards, is not a "consumer product" under the terms of…

980 FEDERAL TRADE COM ISSIOK DECISIONS

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ADVISORY OPINIONS

Modular housing, meeting certain home construction standards, is not a "consumer product" under the terms of section 101(1); and a mobile home manufacturer who simply passes on warranties offered by the manufacturers of equipment installed in a mobil home is not a "warrantor under the terms of section 1l0m of the Magnuson-Moss Warranty Act (15 V. C. 2301 et seq. (File No. 773 7013). (42 F. R. 37440). Advisory Opinion Letter

July 13 , 1977

Dear Mr. Miler:

This is in reply to your request of September 13, 1976, for an advisory opinion concerning Sections 101(1) and 1l0(!) of the Magnuson-Moss Warranty Act, 15 U. C. 2301 et seq. as they apply to factory-built housing. Your request takes the form of three questions, but because the first one is compound in nature, the Commission has dealt with it as two separate inquiries. Therefore, the questions involved in your request are as follows:

(1) Is a modular house, excluding such items of equipment as airconditioners, furnaces, and water heaters, a "consumer product" within the meaning of Section 101(1) of the Magnuson-Moss Warranty Act' (2) Does the classification of a modular house under Section 101(1) of the Magnuson-Moss Warranty Act in any way turn upon whether it is delivered to a real property foundation as a completed structure or in component parts? (3) Does the classification of a modular house under Section 101(1) of the Magnuson-Moss Warranty Act in any way turn upon whether it is sold first to a builder or instead is sold directly to an ultimate consumer.

(4) Is the manufacturer of a mobile home a "warrantor" for purposes of Section 1l0(!) of the Magnuson-Moss Warranty Act of such items of equipment as air-conditioners, furnaces, and water heaters if the mobile home manufacturer simply "passes ADVISORY OPINIONS 981

" the written warranty given by the manufacturer of the equipment and indicates to buyers that such equipment is covered by a manufacturer s warranty? The Commission has carefully considered the matters set forth your letter. It is the Commission s conclusion that: (1) A modular house which meets one of the sets of uniform home construction codes set forth in the appendix to this letter or a construction standard established by a state for modular homes, as distinct from mobile homes as they are defined by the state, is real property and should, therefore, be excluded from the Section 101(1) definition of "consumer product". The sets of uniform codes are widely used in the construction of conventional, "stick-built" homes, which are real property. These codes are usually the basis for any distinct state modular housing codes. Thus, a factory built house which satisfies one of these sets of codes or a separate state modular code is essentially of the nature of real property and should, therefore, be excluded from coverage of the Act. On the other hand, a factory built dwelling that fails to satisfy one of the specified sets of codes or a separate state modular code must comply with the requirements of the Act.

(2) Whether a modular house is delivered to a foundation site as a completed structure or in component parts is irrelevant to the determination that it is or is not a consumer product under Section 101(1) of the Magnuson-Moss Warranty Act. The essential question is the nature of the finished product, not the location of its final assembly. If a manufactured dwelling satisfies one of the sets of uniform codes in the appendix or a state modular code, it is real property for purposes of the Act. If it fails to satisfy one of the sets of codes or a state modular code, it falls within the scope of Section 101(1) as a consumer product. (3) Whether a modular house is sold first to a builder or instead to an ultimate consumer is irrelevant to the determination that it is or is not a consumer product under Section 101(1) of the Magnuson-Moss Warranty Act. The fundamental question is again the nature of the dwelling sold, not the identity of the initial purchaser. If a structure is personal property, normally used for personal, family, or household purposes, it is a consumer product under Section 101(1) regardless of who first purchases it from the manufacturer.

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(4) A manufacturer of mobile homes who simply passes on a written warranty given by the manufacturer of equipment installed in a mobile home and indicates to buyers that such equipment is covered by a manufacturer s warranty is not a warrantor under Section 110(1) of the Magnuson-Moss Warranty Act. The Commission answered this question previously in Section 700.4 of the "Proposed Interpretations" of the Act, 41 Fed. Reg. 34,654 (August 16, 1976). Section 700.4 applies to all consumer products. This includes all consumer products sold with mobile homes, which are themselves consumer products (See Implementation and Enforcement Policy, Section 2, 40 Fed. Reg. 25,721 (June 18, 1975)), and those consumer products sold with modular homes and traditional real property structures. By direction of the Commission.

Appendix