Manufactured Housing (Manufacturer, Retailer, or Installer) License Bond 

What Is the Purpose of the Manufactured Housing License Bond?

The Manufactured Housing License Bond is a license requirement for manufacturers, retailers, or installers receiving their certification from the Alabama Manufactured Housing Commission (AMHC). The bond serves the purpose of indemnifying homeowners or other consumers if damages occur based on the licensee’s actions. This ties in with the Commission’s goal of regulating the industry of manufactured housing protecting the interests of consumers through maintaining compliance from the licensees. 

Who Needs the Manufactured Housing License Bond?

The Manufactured Housing License Bond must be held by the licensees of the AMHC: manufacturers, retailers, and installers. These can be defined as: 

What Do Surety Underwriters Need to Know About the Manufactured Housing License Bond?

The risk on a Manufactured Housing License Bond is dependent on the licensee’s ability to comply with the rules and regulations of the Code of Alabama Title 24, Chapters 4A, 5, and 6 as they relate to manufactured structures. By following these guidelines, it lowers the odds of damages occurring to consumers or their property, which is the main cause of a claim. To enforce compliance, the AMHC has the authority to investigate the site of manufacturing, selling, or offering manufactured structures for sale under Section 24-5-9 of the Code of Alabama; any of the licensee’s violations may be met with disciplinary action. 

After an evaluation of the practices of the AMHC and a discussion with surety leaders, this bond can be deemed as a low risk for claims. Underwriting for the bond will still require a credit check due to the range in the limits: $20,000 for an installer, $25,000 for a retailer with one to three facilities, $50,000 for a retailer with more than three facilities, and $100,000 minimum limit for manufacturers ($25,000 per licensed facility, implemented when there are more than 4 facilities). The AHMC also has the authority to increase or decrease the bond limit after a periodical review of claims activity (Alabama Administrative Code, Section 535-X-15-.03). 

Although this bond is considered low risk, it is worth mentioning that it has a liability tail. A claim can be filed up to 12 months after the surety has been released of liability for an incident that occurred while liability was in force. 

What Do Surety Claims Handlers Need to Know About the Manufactured Housing License Bond?

Claims against the Manufactured Housing Bond are filed by homeowners or other consumers that suffer damages as a result of the licensee’s violations of Sections 4A, 5, and 6 of the Code of Alabama. The Alabama Administrative Code, Chapter 535, Article 15 indicates the procedure for action on the bond. The AHMC will receive complaints and determine their validity as a claim on the bond and the culpable party. For valid violations, the AHMC may suspend the license of the manufacturer, retailer, or installer and impose a $1,000 fine for each violation (Section 535-X-15-.06, Alabama Administrative Code). 

As an additional protection for the citizens of Alabama, the AMHC requires general liability insurance for its licensees. The insurance requirements are: installers at $100,000, retailers at $500,000, and manufacturers at $1,000,000. 

Are There Any Alternatives to the Manufactured Housing License Bond?

The cost of a Manufactured Housing Bond ranges from 1% to 10% of the required bond limit. Rates available are dependent on the type of license applied for with the AMHC (which determines the bond limit) and the principal’s personal credit. For manufacturers with a higher limit, business and personal finances may be included in the underwriting process. 

How Is the Manufactured Housing License Bond Filed?

The Manufactured Housing License Bond must be completed by the surety company (surety seal, signature, and power of attorney) and by the principal (signature) before it is submitted to the Alabama Manufactured Housing Commission.

Once the original bond and any other paperwork are ready, the principal shall mail them to: 

Alabama Manufactured Housing Commission
350 South Decatur Street
Montgomery, AL 36104

Can the Manufactured Housing License Bond Be Cancelled?

Yes, a surety company can cancel a Manufactured Housing Bond by giving 30 days’ notice to the AMHC. Once the cancellation period has ended, the surety company may refund any remaining premium according to its cancellation policy. 

Do Manufactured Housing License Bonds in Alabama Renew? 

Yes, the Manufactured Housing Bond must be renewed along with the manufacturer, retailer, or installer license. The renewal must be completed before the expiration of the bond’s liability to avoid a lapse in coverage. 

Do Manufactured Housing Licensees Need Any Other Bonds? 

No, manufacturers, retailers, and installers are not obligated to hold any bond other than the Manufactured Housing Bond.