Insurance company to pay thousands of dollars owed to Colorado manufactured home purchasers
July 22, 2021 (DENVER)—Attorney General Phil Weiser today announced a settlement that will help two couples recover a portion of the tens of thousands of dollars in down payments they lost to a home manufacturer that went bankrupt without building their homes.
Companies that register with the Colorado Division of Housing to sell manufactured housing in the state are legally required to provide a $50,000 bond to the state. This bond is enforceable by the attorney general to protect purchasers for any loss they experience due to bankruptcy or the failure to deliver a manufactured home.
In 2018, two couples paid Riverwood Cabins down payments to build them homes in Colorado—one in Eagle and the other in Jefferson. But Riverwood Cabins filed for bankruptcy in February 2020 without having built either home.
The attorney general’s office demanded that the bond issuer—United States Fire Insurance Company—pay the two couples. Initially, USFIC refused to pay, claiming that the bond only covered Wood-Tex Products LLC, which is another name under which Riverwood Cabins operated in the state.
Because the company used the two names interchangeably when selling manufactured homes in Colorado, USFIC was required by Colorado law to pay the full $50,000 bond.
In the settlement announced today, the company agreed to pay the bond, which will be divided between the two couples.
“While these prospective homeowners will not receive the homes they were anticipating, I am pleased that we could recover partial relief through these bond dollars,” said Weiser. “My office will continue to protect consumers, including by taking legal action to hold companies accountable to their promises and legal responsibilities to Coloradans.”
Today’s settlement is the third time the Department of Law’s State Services Division, working with partners in the Division of Housing at the Colorado Department of Local Affairs, has enforced this law to protect manufactured home buyers. In 2020, the State Services Division recovered $100,000 from a different insurance company after 14 other families in Colorado also made down payments to Riverwood Cabins without receiving a home. And in 2019 the division recovered a $50,000 bond issued on behalf of another seller who failed to deliver a manufactured home after accepting a large down payment from the consumer.