How do you perfect a lien on manufactured homes held as dealer inventory in Texas?

Texas AG Opinion JM-984: How Is a Lien on Manufactured-Housing Inventory Perfected?

Plain-English summary

When a lender finances a business's inventory, it takes a security interest, a legal claim on the goods, and it has to "perfect" that interest by making the right public filing so the claim holds up against other creditors. For most business inventory, the Uniform Commercial Code says you file a financing statement, and in Texas the catch-all rule sends that filing to the Secretary of State. Manufactured housing, though, has its own separate regulatory scheme, and that is where the confusion came from. The Secretary of State asked which system controls when a financer holds manufactured homes as inventory: the general UCC filing with his office, or a special filing with the state agency that oversees manufactured housing.

The two statutes really did point in different directions. The Texas Manufactured Housing Standards Act (article 5221f) says a lien on manufactured homes in inventory is perfected by filing the security agreement with the department that regulates the industry, and it declares that its own provisions override conflicting parts of the Business and Commerce Code. But the UCC's section 9.302 has a clause saying that while goods are inventory held for sale by someone in that business, the UCC's ordinary filing provisions apply, which would route the filing to the Secretary of State.

The Attorney General worked through the conflict with two standard tools. First, courts try to harmonize statutes on the same subject and read them together. When that is impossible because the two flatly contradict each other, the second rule kicks in: the more recent statement of what the Legislature wants controls, and it repeals the older one to the extent they clash. Here, the deciding provision was section 18 of article 5221f, which the Legislature amended in 1987. That amendment says any law in conflict with article 5221f is superseded and preempted to the extent of the conflict, and it is the newest enactment on the question.

Because article 5221f had the last word, it wins. The answer is that a lender perfects a lien on manufactured homes held as inventory by filing the security agreement with the Texas Department of Labor and Standards (the agency that regulated the industry at the time), and no separate filing with the Secretary of State is required.

Currency note

This opinion was issued in 1988. Subsequent statutory amendments, court decisions, or later AG opinions may have changed the analysis. Treat this page as historical context, not current legal advice. Verify current law before relying on any specific rule, deadline, or remedy mentioned here.

Both the Manufactured Housing Standards Act and the UCC have changed substantially since 1988. The regulator named here, the Texas Department of Labor and Standards, no longer exists; oversight of manufactured housing moved to the Texas Department of Housing and Community Affairs and its Manufactured Housing Division. Article 5221f has since been recodified into the Occupations Code, and UCC Article 9 was overhauled statewide (Texas adopted revised Article 9 effective in 2001). Anyone perfecting a lien on manufactured-housing inventory today should work from the current Occupations Code manufactured-housing provisions and current Business and Commerce Code Article 9, not the article and section numbers used here.

Who this opinion affected (as of 1988)

Lenders and finance companies holding manufactured-home inventory: The opinion told them the correct way to perfect their lien was a filing with the Texas Department of Labor and Standards, not a UCC financing statement with the Secretary of State.

Manufactured-housing dealers: The opinion clarified which filing system governed liens on the homes sitting in their inventory.

The Secretary of State's office: The opinion answered its question that a UCC filing with the office was not necessary to perfect these inventory liens.

Common questions

Do I file with the Secretary of State to perfect a lien on manufactured-home inventory?
No. In this opinion the Attorney General concluded a Secretary of State filing is not necessary; the lien is perfected by filing the security agreement with the department that regulates manufactured housing.

Why does the special manufactured-housing law beat the UCC here?
Because when two statutes on the same subject cannot be reconciled, the later legislative enactment controls. The Attorney General found section 18 of article 5221f, amended in 1987, was the most recent word and expressly supersedes conflicting Business and Commerce Code provisions.

What is "perfecting" a security interest?
It is making the legally required public filing that establishes and protects a lender's claim to collateral against other creditors. The question here was simply which filing office and statute governed for manufactured-home inventory.

Background and statutory framework

The Secretary of State asked whether a chapter 9 (UCC) filing with his office is necessary to perfect a security interest in manufactured housing held by the financer as inventory, directing attention to a possible conflict between article 5221f, V.T.C.S. (the Texas Manufactured Housing Standards Act) and section 9.302 of the Business and Commerce Code.

Section 19(i) of article 5221f (Acts 1981, 67th Leg., ch. 815, section 4, effective August 31, 1981) provides that a lien on the manufactured homes in the inventory is perfected by filing a security agreement with the department (the Texas Department of Labor and Standards) in a form containing the information the department requires. Section 19(n) provides that the express provisions of the article supersede any conflicting provisions of the Business and Commerce Code, and otherwise the Business and Commerce Code applies to transactions relating to manufactured housing.

Section 9.302(c) of the Business and Commerce Code (as amended by Acts 1983, 68th Leg., ch. 290, section 8, effective August 28, 1983) provides that the filing of a financing statement otherwise required is not necessary or effective to perfect a security interest in property subject to certain statutes, including the Texas Manufactured Housing Standards Act (article 5221f), but that during a period in which the collateral is inventory held for sale by a person in the business of selling goods of that kind, the filing provisions of the chapter (Subchapter D) apply to a security interest in that collateral created by him as debtor. Section 9.401 requires filing with the county clerk to perfect a security interest where certain items constitute the collateral and, "in all other cases," requires filing with the Secretary of State; that catch-all is the provision that would otherwise apply here.

Section 18 of article 5221f, as amended by Acts 1987, 70th Leg., ch. 1134, effective June 18, 1987, provides that a violation of the article is a deceptive trade practice in addition to those in section 17.50 of the Business and Commerce Code, and that all laws, parts of laws, ordinances, rules, or regulations in conflict with the article are superseded and preempted to the extent of the conflict.

Where laws deal with the same subject matter they should be harmonized and construed together as though parts of the same law. Gordon v. Lake, 356 S.W.2d 138 (Tex. 1962). When statutes are inconsistent and irreconcilable they cannot both stand, and the later expression of legislative intent controls and repeals the earlier statute to that extent. State v. Easley, 404 S.W.2d 296 (Tex. 1966); Shultz v. State, 696 S.W.2d 126 (Tex. App. - Dallas 1985, writ ref'd n.r.e.). Section 18 of article 5221f, as amended by the 70th Legislature, is the latest enactment germane to the question, and because it provides that conflicting laws are superseded and preempted to the extent of the conflict, the provisions of article 5221f control. Thus a lien on manufactured homes in the inventory is perfected by filing the security agreement with the Texas Department of Labor and Standards.

Citations

Statutory authority:

• Business and Commerce Code § 9.302(c) (perfection of security interests subject to specified statutes; inventory-held-for-sale clause)
• Business and Commerce Code § 9.401 (place of filing; Secretary of State catch-all)
• Business and Commerce Code § 17.50 (deceptive trade practices)
• Article 5221f, V.T.C.S. § 18 (violations as DTPA; supersession and preemption of conflicting laws, as amended 1987)
• Article 5221f, V.T.C.S. § 19(i) (lien on inventory perfected by filing with the department)
• Article 5221f, V.T.C.S. § 19(n) (express provisions supersede conflicting Business and Commerce Code provisions)

Cases:

• Gordon v. Lake, 356 S.W.2d 138 (Tex. 1962)
• State v. Easley, 404 S.W.2d 296 (Tex. 1966)
• Shultz v. State, 696 S.W.2d 126 (Tex. App. - Dallas 1985, writ ref'd n.r.e.)

Source

• Landing page: https://www.texasattorneygeneral.gov/opinions/jim-mattox/jm-984
• Original PDF: https://www.texasattorneygeneral.gov/sites/default/files/opinion-files/opinion/1988/jm0984.pdf

Original opinion text

Best-effort transcription from a scanned PDF. Minor OCR errors may remain; the linked PDF is authoritative.

November 22, 1988

Honorable Jack M. Rains
Secretary of State
P. O. Box 12697
Austin, Texas 78711

Opinion No. JM-984

Re: Whether a filing with the Secretary of State is necessary to perfect a security interest in manufactured housing held as inventory (RQ-1469)

Dear Mr. Rains:

You ask whether a filing with the Secretary of State's office pursuant to chapter 9 of the Texas Business and Commerce Code (UCC) is necessary to perfect a security interest in manufactured housing held by the financer as inventory.

You direct our attention to a possible conflict in article 5221f, V.T.C.S., (the Texas Manufactured Housing Standards Act) and section 9.302 of the Business and Commerce Code relative to the perfection of security interests in manufactured housing.

Section 19(i) of article 5221f, Acts 1981, 67th Legislature, page 3088, chapter 815, section 4, effective August 31, 1981, provides:

A lien on the manufactured homes in the inventory is perfected by filing a security agreement with the department [Texas Department of Labor and Standards] in a form that contains the information the department requires.

Section 19(n) of article 5221f states:

(n) The express provisions of this article supersede any conflicting provisions of the Business & Commerce Code; otherwise, the provisions of the Business & Commerce Code apply to transactions relating to manufactured housing.

Section 9.302(c) of the Business and Commerce Code, as amended by Acts 1983, 68th Legislature, chapter 290, section 8, page 1533, effective August 28, 1983, provides that the filing of a financing statement otherwise required by this chapter is not necessary or effective to perfect a security interest in property subject to

(2) the following statutes of this state . . . the Texas Manufactured Housing Standards Act, as amended (Article 5221f, Vernon's Texas Civil Statutes); but during a period in which collateral is inventory held for sale by a person who is in the business of selling goods of that kind, the filing provisions of this Chapter (Subchapter D) apply to a security interest in that collateral created by him as debtor; or Subchapter A, Chapter 35, Title 4, Business & Commerce Code, relating to utility security instruments. (Emphasis added.)

Section 9.401 of the Business and Commerce Code requires filing with the county clerk to perfect a security interest where certain specified items constitute the collateral. This section also contains a general provision requiring that the filing "in all other cases" be with the Secretary of State. It is the latter provision that applies to the instant scenario.

Section 18 of article 5221f as amended by Acts 1987, 70th Legislature, chapter 1134, page 3888, effective June 18, 1987, provides:

(b) A violation of any of the provisions of this article is a deceptive trade practice in addition to those set forth in Section 17.50, Business & Commerce Code. The provisions of all laws, parts of laws, ordinances, rules or regulations which are in conflict with any of the provisions of this article are superseded and preempted to the extent of such conflict. (Emphasis added.)

Where laws deal with the same subject matter they should be harmonized and construed together as though they were parts of the same law. Gordon v. Lake, 356 S.W.2d 138 (Tex. 1962). When statutes are inconsistent and irreconcilable they both cannot stand at the same time. In the event of such conflict, the later expression of legislative intent controls and, to that extent repeals the earlier statute. State v. Easley, 404 S.W.2d 296 (Tex. 1966); Shultz v. State, 696 S.W.2d 126 (Tex. App. - Dallas 1985, writ ref'd n.r.e.).

Section 18 of article 5221f as amended by the 70th Legislature is the latest enactment germane to your question. Since it provides that any laws "which are in conflict with any provisions of this article [article 5221f] are superseded and preempted to the extent of such conflict," it follows that the provisions of article 5221f control. Thus, a lien on manufactured homes in the inventory is perfected by filing the security agreement with the Texas Department of Labor and Standards.

SUMMARY

A filing with the Secretary of State is not necessary to perfect a security interest in manufactured housing held by the financer as inventory.

JIM MATTOX
Attorney General of Texas

MARY KELLER
First Assistant Attorney General

LOU MCCREARY
Executive Assistant Attorney General

JUDGE ZOLLIE STEAKLEY
Special Assistant Attorney General

RICK GILPIN
Chairman, Opinion Committee

Prepared by Tom G. Davis
Assistant Attorney General