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Ep. 85 | Why and How to Get A Mobile Home Dealer License

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On this episode of The Mobile Home Park Lawyer, Ferd discusses how to get a retailer’s license, and why it is important to have one. Ferd takes us through the process of getting your license and explains how state rules and regulations can differ regarding these licenses.

 

HIGHLIGHTS:

0:00 – Intro
1:01 – It is frustrating but important to get a retailer’s license
1:14 – Ferd discusses how requirements may differ in different states
1:32 – Why do some states require you to have a retailer’s license?
2:39 – Ferd brings us through the process of getting your retailer’s license
3:52 – A lot of states classify your dealer lot as a used car lot which is a problem
5:53 – Zoning can cause issues
7:28 – Ferd explains Nebraska’s rules regarding getting your retailer’s license
9:42 – Ferd explains that you will need to get a Sales Tax ID Number from the state and likely a Certificate of Good Standing as well
11:30 – It is important to thoroughly review the applications so that they get accepted first time around
13:17 – Ferd explains why having a retailers license can help you sell Mobile Homes

 

FULL TRANSCRIPTION:

Welcome back mobile home park nation. Ferd Niemann here again with another episode of The Mobile Home Park Lawyer podcast. In today’s episode, I’m going to talk to you about getting your retailer’s license. Getting a retailer’s license, I’m going to put it up there with dealing with government agencies to get permits, dealing with some banks to get through the loan approval process, and pretty much anything involving the DMV. It’s one of the little pleasures in life. I’m kidding. It’s a huge pain in the butt. It’s frustrating, but it’s important. Why do you need a retailer’s license?

Well, depending on the state and some states will call it a dealer license, but it’s basically depending on the state, you must have it in order to legally sell mobile homes. Now, some states are pretty low on regulation, or they may not even require it if you’re only selling used mobile homes. But pretty much every state requires it. At least I’m not aware of any state that doesn’t require it for the sale of new mobile homes.

And one of the primary reasons is, when you sell them new goods in most states, there’s a sales tax. Well, the sales tax, the government must to be paid, so they want to make sure you’re collecting it. You’re going to need things like a sales tax ID number from the department of revenue. You’re going to also need to be regulated and they want to make sure you’re not taking advantage of customers and want to make sure you’re a proper entity, etc., etc. So getting the dealer license is a necessary evil.

A lot of times if you’re going to sell mobile homes, in particular, you want to use somebody like 21st mortgage to finance your end buyers. They’re going to require your dealer’s license. If you’re going to buy new homes direct from the manufacturer, I say, they’re going to require a dealer’s license, but to be honest, not all of them have asked me for a copy. I’ve said, Hey, look, I’m a dealer. They say, okay, let me sign you up. Some of them and most of them, frankly, will require a copy of it. I think they’re all supposed to, they’re just, not always that diligence. So anyway those are some of the key reasons of why you need a dealer’s license.

So I’m just going to go through real quickly what the process looks like and what you need. And this has been going on, we’ve recently bought mobile home parks in several states. So I’ve been having members of my teamwork on this, but it becomes a little bit of a pain. So it’s not something that you can easily just hand off to your receptionist or your secretary. It’s got to be somebody who’s got a little more intimacy with the business and understands kind of how things work or at least is capable and diligent.

I’m looking at we’re going through Nebraska right now. Surprisingly for being a largely red state, red meaning, you know, more Republican, typically less government interference or less red tape. Surprisingly, Nebraska has got quite a few requirements and it’s a little of a pain. Done a handful of other states and it’s not as big of a deal. And that was hard. You know, Missouri, for example, is not as challenging. Although they do want you to have, if it’s the same entity, they at least want you to have a license or permission for second and third, and fourth locations. Because your dealer lot, you’ve got to think of it as like a used car lot. That’s what a lot of these states classify this as, which frankly is a problem. Because we’re not the same as used cars.

You know, for example, I don’t have a service facility, right. And that’s a requirement they have and where do I handle repairs and service? Like we’re not repairing mobile homes here in the sense of repairing cars, but they lump us in. And unfortunately, you know, car dealerships, especially used car dealerships have a bad reputation and some of those are probably valid, but as a result, there’s going to be a pretty stiff amount of regulation because, and just oversight because they frankly, they lump us in with those guys. And it’s a huge pain now.

And in some states, you’re going to be regulated by an agency like The Department of Motor Vehicles, some states it’s going to be a combination, or at least partially with the department of revenue. In Missouri it is interesting that you title homes with the department of motor the vehicles, you get your sales tax ID from the department of revenue, but you’re regulated under The Missouri Public Service Commission, which is typically for utilities, you know, gas companies, electric companies, railroads, and all of a sudden mobile home park, manufactured housing dealers.

So anyway, the process usually includes, you know, filling out an application. They want to know, you know, you’ve got a legitimate entity, personal name or an entity. They want the name of the dealership. They want to know that you have the proper location and zoning. So this can sometimes be a problem. So I have a park in Illinois, I sold this park, but I was going to get my retailer’s license in Illinois. Another state, that was more challenging to do this with. They required eight hours of training and they required, you know, watching all these videos, they required to show up in person, you got to get fingerprinted. And it’s kind of a big deal. We ended up doing it for another property. With the first property we tried to do it for, the zoning was the hiccup. My mobile home park was zoned residential. It was not zoned for a mobile home park. It was grandfathered in, and as a result I was still able to operate my mobile home park. And I received a successful zoning letter from the municipality. But the problem was that that residential zoning did not allow for commercial sales.

Well, the state required that I have the written letter from the city allowing for the commercial sale of vehicles. Well, clearly, I couldn’t get that in a residential zoning, so the state says, oh, just change your zoning. Like, well, it’s not really that simple guys, getting rezoned to commercial in a residential neighborhood is going to be pretty challenging.

So the practical solution that the state wanted was, hey just go rent some space in town on Main Street, and you can put your mobile homes there. Well, that doesn’t work as well because places like 21st Mortgage wants your retail sales lot to be your mobile home park. They want that to be, you know, where you’re at. So there’s inconsistencies between, oftentimes between what the end banks want, what the manufacturers want, what the city wants and what the state wants. Which again, goes back to my preamble of why this is one of the little joys in life is having to deal with this thing.

But anyway, that’s something that state user requires is a copy of a zoning permit or copy of a letter from city authorizing auto slash trailer sales. Some states like Nebraska, whose application I’m going through right now and looking at, they require a photograph of the sign or business. Nebraska’s weird. They do not let you pay the fee until after they’ve basically inspected you and approved you. So we had to order a sign and the sign, has to have the dealer name, which is different than some other states where I just put the name of the park. You know, the name of this park is grand lake. Well, the LLC is not the same. The dealer’s license is not the same, so we’ve got to get a second sign. We’ve got to get the big sign for marketing, but we got to have another sign that has the LLC name and the address, and the phone number and the business hours posted and, you know, kind of like a real dealership where people are going to show up.

So those are some of the things you need signage, you know, hours, phone number. If you don’t own the ground, you got to have a lease agreement. They want you to have a service facility or agreement that where are you going to service it. Good luck convincing the bureaucrats that does not applicable, just takes time. You need insurance. Typically, you should have it anyway, but sometimes the dealer license requires additional insurance, the kind of insurance, you know, in addition to your typical casualty insurance or liability, sometimes you need a surety or some sort of performance bond, or some sort of bonding, you know, it’s a big number, like $50,000, but it doesn’t cost that much. It’s insurance.

Sometimes it’s a pain to get an insurance carrier that will want to use this. I mean, most of your national insurance companies are going to have the ability to write paper or write insurance for other providers. So like I’ve got workers’ comp from travelers. I don’t even know anybody at travelers, but my agent, his company doesn’t sell it. So they go through travelers, you can get all kinds of insurance and I should probably have a whole episode on insurance.

But typically for things like this, you need a surety bond. They’re going to want to see workers’ comp. They’re going to want to see liability. That’s just kind of one of the requirements. If you have a franchise agreement or you have some sort of resale agreement with a certain manufacturer, they’re going to often want to see that. Again, I mentioned earlier, you’re going to have to get a sales tax ID number from the state. You’re probably going to have to get a certificate of good standing from the state which is interesting. You got to ask one department of the government to verify that you’re a real entity, so that the other department of government can verify it. It’s not that expensive. You know, you can usually get those for $10 or $25. It’s just another step, right? Another hassle.

And the key to getting these licenses is just being diligent and detailed on your application. Because some of them, you have to pay. Usually, you have to file in paper. It’s crazy. It’s like the other day I had to do something with the IRS. You have to fax it to them. I mean, the guy asked me where he could send me a fax and I told him 1990, and it’s just unbelievable sometimes going through these processes. But what stinks on this is if you goof, another LLC, and whoever sent it in, I don’t know who it was on my team, I forgot. They didn’t do it right. So what do you know? We missed something. They send it back. Sometimes they send it back and they’re really helpful. And they say, you forgot to sign the bottom page. You forgot to include a copy of your business license with the local municipality. Sometimes they just send it back and say, not accepted, incomplete, or not accepted, incorrect. And then you’ve got to go back with a fine-tooth comb. And then sometimes you can’t even figure it out. You’re like, what did I miss? But such is life, right? So that’s part of the process as well is just a little back and forth. I can tell you it’s much better to not have to go back and forth as much better to get it right the first time. So really review the information on the application, on the, you know, the government website.

Ultimately getting a dealer’s license is important. And you’re going to want to and display it. Most places you want to display it in your office or on the location of the city manager, the park managers house or window to prove you have the ability. There’s some level of gravitas with clients, look, I’m a dealer. It’s definitely the way to go. If you’re going to be selling homes and you know, more than one or two or three, especially if you’re selling new homes, there are some exceptions. I mean, I’ll be honest, my first park, I don’t even think about a dealer’s license, but I was selling used homes. I don’t even know if you needED a license for used homes at that time.

Some states I’ve since looked at it, they have some exceptions, if you only sell one a year or three a year, sometimes if you own the home in your LLC or should be in your personal name and not an LLC, which frankly is crazy, but they give you exceptions. It’s like, hey, if you do this in a dumb manner, we’re going to make your life easier, which I kind of get, if it’s like the individual, like there’s generally exceptions for if you live in the home or if you’re, you know you’re only home a year. Like clearly, you’re not a big-time dealer. You’re just like selling your own property. So that’s okay.

Yeah, another factor I’m thinking of off the cuff here that is important for dealers license you know, well, this is kind of related, but it’s a little indirectly. You know, just the sale of mobile homes in general under Dodd-Frank and safe act, there’s a lot of restrictions on that. Many of which have not frankly been enforced, but you know, when you’re seller financing, so dealer license can help in general for selling homes. If you sell them through seller financing, there’s going to be additional hurdles. I’ve got separate podcast episodes on lease to own, rent credit, contract for deed. So go back 30 episodes or something, and you can listen to those if you’ve skipped them, but overall getting a dealer’s license very important, not a five-minute process, pretty inexpensive fees typically. I mean, sometimes it’s free. Typically it’s $50, or $100, renew it. Sometimes you have to do training or go through some sort of class. This is distinct from installation or manufacturer install license. That’s a whole another set of processes. I should cover that, I guess, on a future episode, but anyway, that’s about all I got for dealer license, retailer license until next time have fun. God bless.

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