(a) The owner of a manufactured home may submit an application to the department requesting that the department indicate on the department's records that the manufactured home is not subject to this chapter if

(1) the manufactured home is permanently affixed to real property under AS 34.85.150, or the owner intends to permanently affix the manufactured home to real property under AS 34.85.150; and

(2) the manufactured home

(A) is not covered by a manufacturer's certificate of origin or a certificate of title;

(B) is covered by a manufacturer's certificate of origin, but the owner of the manufactured home, after diligent search and inquiry, is unable to produce the certificate of origin; or

(C) is covered by a certificate of title, but the owner of the manufactured home, after diligent search and inquiry, is unable to produce the certificate of title.

(b) The application under (a) of this section must comply with AS 28.10.266 and be accompanied by a bond or cash deposit described in (c) of this section.

(c) The bond that accompanies the application under (b) of this section must be in the form prescribed by the department and executed by the applicant. The amount of the bond or cash deposit that accompanies the application under (b) of this section must be equal to one and one-half times the value of the manufactured home as determined by the department and must be conditioned to indemnify former owners, secured parties, and subsequent purchasers of the manufactured home and their successors against loss resulting from a defect in or undisclosed security interest on the title of the applicant. An injured party may bring a court action against the bond or cash deposit for a breach of the conditions of the bond or cash deposit, but the liability of the bond surety or the department may not exceed the amount of the bond or cash deposit. The department shall return the bond or cash deposit at the end of three years after the submission under (b) of this section, except that service on the department of notice that an action is pending against the bond or cash deposit extends that period until 45 days after a final decision in the action on the bond or cash deposit.

(d) If the department is satisfied that the application filed under (a) of this section complies with (b) of this section, the department shall, subject to AS 28.05.041, indicate under AS 28.05.061 on the department's records that the manufactured home is not subject to this chapter and shall provide to the owner a written confirmation that the owner of the manufactured home has submitted an application that complies with (b) of this section and that the manufactured home is not subject to this chapter. The department shall deliver the written confirmation to the owner of the manufactured home and to a person identified under AS 28.10.266(12).

(e) When the department has provided a written confirmation under (d) of this section, the manufactured home is not subject to this chapter.