In 2016, the Utah tiny house laws were changed to increase the security of buyers. Now tiny house sellers need a license and a surety bond to launch their business.
As in other states across the country, tiny houses are gaining popularity in Utah. More and more people want to realize their dream of living sustainably in a tiny house – and in nature. This means that dealerships are also growing, which creates the need for settling legally how they should operate in order to protect buyers.
That’s why the new Utah laws have introduced a licensing and bonding requirement for tiny house dealers in the state. Let’s look at the details about the process.
What are the new Utah tiny house laws?
To ensure legal compliance of Utah tiny house dealers, they are now required to get licensed as factory-built home dealers. The new requirement is defined in R156 of the Utah Administrative Code, Chapter 56. The licensing body is the Utah Division of Occupational and Professional Licensing (DOPL).
Dealers have to undergo the licensing, so that authorities can check their background and finances and deem them as suitable to conduct such business activities. As a part of the process, applicants have to post a surety bond in the amount of $50,000. It guarantees that dealers will abide by the rules in the Building Inspector and Factory Built Housing Licensing Act (Utah Administrative Code, Ch. 56).
What are the licensing process and bonding requirements?
There is no separate licensing procedure for tiny house dealers, so they need to undergo the DOPL process set for factory-built home dealers. They need to fill in the Factory Built Housing Dealer Application and meet a number of requirements.
Dealers have to:
- Provide information and documents for their business entity
- Complete a qualifying questionnaire
- Pay a $30 application fee
- Post a $50,000 surety bond
All these requirements are set in order to ensure dealers’ competency and suitability for the job.
The licensing period runs from October 1 of every even-numbered year to September 30 of the following such year. Tiny house dealers have to renew their license before the expiration date. For buyers, it’s a good idea to always check the validity of the dealer’s license before purchase.
How does bonding work?
The surety bond is a licensing requirement for a number of professional occupations. Its goal is to guarantee that the licensed business is trustworthy and will follow applicable laws that govern its trade. It is an extra layer of security for customers.
In the case of tiny house dealers, the bond ensures that dealers will respect the rules set in the Building Inspector and Factory Built Housing Licensing Act. If they fail to do so, they can face a claim on the bond. That’s how affected parties such as buyers can get compensation if the case is proven.
To get bonded, dealers have to cover a percentage of the $50,000 bond amount that is required by the DOPL. If they have stable finances, they will need to pay about 1%-5% of that amount, which means a premium of $500-$2,500. If they get a proven claim on the bond, however, they may have to compensate the harmed party up to the full penal sum of the bond – $50,000.
The licensing and bonding requirement aim to ensure high standards for Utah tiny house dealerships and their clients. What are your thoughts about the new rules? Please share your insights in the comments below.
Vic Lance is the founder and president of Lance Surety Bond Associates. He is a surety bond expert who helps business owners get licensed and bonded. Vic graduated from Villanova University with a degree in Business Administration and holds a Masters in Business Administration (MBA) from the University of Michigan’s Ross School of Business.