[Federal Register Volume 76, Number 245 (Wednesday, December 21, 2011)]
[Rules and Regulations]
[Pages 79486-79527]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2011-31713]
[[Page 79485]]
Vol. 76
Wednesday,
No. 245
December 21, 2011
Part VII
Bureau of Consumer Financial Protection
-----------------------------------------------------------------------
12 CFR Parts 1010, 1011, and 1012
Interstate Land Sales Registration Program (Regulations J, K, and L);
Interim Final Rule
Federal Register / Vol. 76, No. 245 / Wednesday, December 21, 2011 /
Rules and Regulations
[[Page 79486]]
-----------------------------------------------------------------------
BUREAU OF CONSUMER FINANCIAL PROTECTION
12 CFR Parts 1010, 1011, and 1012
[Docket No. CFPB-2011-0025]
RIN 3170-AA06
Interstate Land Sales Registration Program (Regulations J, K, and
L)
AGENCY: Bureau of Consumer Financial Protection.
ACTION: Interim final rule with request for public comment.
-----------------------------------------------------------------------
SUMMARY: Title X of the Dodd-Frank Wall Street Reform and Consumer
Protection Act (Dodd-Frank Act) transferred rulemaking authority for a
number of consumer financial protection laws from seven Federal
agencies to the Bureau of Consumer Financial Protection (Bureau) as of
July 21, 2011. The Bureau is in the process of republishing the
regulations implementing those laws with technical and conforming
changes to reflect the transfer of authority and certain other changes
made by the Dodd-Frank Act. In light of the transfer of the Department
of Housing and Urban Development's (HUD's) rulemaking authority for the
Interstate Land Sales Full Disclosure Act (ILSA) to the Bureau, the
Bureau is publishing for public comment an interim final rule
establishing a new Regulation J (Land Registration); a new Regulation K
(Purchasers' Revocation Rights, Sales Practices and Standards); and a
new Regulation L (Special Rules of Practice). This interim final rule
does not impose any new substantive obligations on persons subject to
HUD's existing ILSA regulations.
DATES: This interim final rule is effective December 30, 2011. Comments
must be received on or before February 21, 2012.
ADDRESSES: You may submit comments, identified by Docket No. CFPB-2011-
0025 or RIN 3170-AA06, by any of the following methods:
Electronic: http://www.regulations.gov. Follow the
instructions for submitting comments.
Mail: Monica Jackson, Office of the Executive Secretary,
Bureau of Consumer Financial Protection, 1500 Pennsylvania Avenue NW.
(Attn: 1801 L Street), Washington, DC 20220.
Hand Delivery/Courier in Lieu of Mail: Monica Jackson,
Office of the Executive Secretary, Bureau of Consumer Financial
Protection, 1700 G Street NW., Washington, DC 20006.
All submissions must include the agency name and docket number or
Regulatory Information Number (RIN) for this rulemaking. In general,
all comments received will be posted without change to http://www.regulations.gov. In addition, comments will be available for public
inspection and copying at 1700 G Street NW., Washington, DC 20006, on
official business days between the hours of 10 a.m. and 5 p.m. Eastern
Time. You can make an appointment to inspect the documents by
telephoning (202) 435-7275.
All comments, including attachments and other supporting materials,
will become part of the public record and subject to public disclosure.
Sensitive personal information, such as account numbers or social
security numbers, should not be included. Comments will not be edited
to remove any identifying or contact information.
FOR FURTHER INFORMATION CONTACT: Bill Matchneer or Whitney Patross,
Office of Regulations, at (202) 435-7700.
SUPPLEMENTARY INFORMATION:
I. Background
The Interstate Land Sales Full Disclosure Act (ILSA) protects
consumers by requiring certain land developers to register their plans
and to provide prescribed disclosures to prospective purchasers.
Developers of subdivisions with one hundred or more nonexempt lots, and
developers of condominiums with one hundred or more nonexempt units,
must register development plans with the Federal regulator designated
by ILSA. These developers must also provide purchasers with a
comprehensive disclosure statement known as a property report before a
contract of sale is signed. Historically, ILSA has been implemented by
the Department of Housing and Urban Development's (HUD's) Interstate
Land Sales Registration Program, 24 CFR Parts 1710, 1715 and 1720. The
Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank
Act) \1\ amended a number of consumer financial protection laws,
including ILSA. In addition to various substantive amendments, the
Dodd-Frank Act transferred rulemaking authority for ILSA to the Bureau
of Consumer Financial Protection (Bureau), effective July 21, 2011. See
sections 1061 and 1098A of the Dodd-Frank Act. Pursuant to the Dodd-
Frank Act and ILSA, as amended, the Bureau is publishing for public
comment an interim final rule to implement ILSA by establishing a new
Regulation J (Land Registration), 12 CFR part 1010; a new Regulation K
(Purchasers' Revocation Rights, Sales Practices and Standards), 12 CFR
part 1011; and a new Regulation L (Special Rules of Practice), 12 CFR
part 1012.
---------------------------------------------------------------------------
\1\ Public Law 111-203, 124 Stat. 1376 (2010).
---------------------------------------------------------------------------
II. Summary of the Interim Final Rule
A. General
The interim final rule substantially duplicates HUD's Interstate
Land Sales Registration Program regulations, 24 CFR parts 1710, 1715,
and 1720, as the Bureau's new Regulation J (Land Registration), 12 CFR
part 1010; new Regulation K (Purchasers' Revocation Rights, Sales
Practices and Standards), 12 CFR part 1011; and new Regulation L
(Special Rules of Practice), 12 CFR part 1012, making only certain non-
substantive, technical, formatting, and stylistic changes. To minimize
any potential confusion, the Bureau is preserving the numbering of
HUD's ILSA regulations other than the new part numbers. While this
interim final rule generally incorporates HUD's existing regulatory
text, including model forms and clauses, the rule has been edited as
necessary to reflect nomenclature and other technical amendments
required by the Dodd-Frank Act. Notably this interim final rule does
not impose any new substantive obligations on regulated entities.
B. Specific Changes
This interim final rule makes numerous amendments throughout HUD's
existing regulatory text to reflect ILSA's transfer to the Bureau.
``Secretary'' is replaced with ``Director,'' ``Department of Housing
and Urban Development'' with ``Bureau of Consumer Financial
Protection,'' and ``Department'' with ``Bureau.''
Model language for disclosure and other purposes that appeared in
the text of HUD's ILSA regulations has been moved to a new appendix.
The model clauses and the sections of HUD's regulations that address
these model clauses include:
I. Developers Affirmation for Land Sale Sec. 1710.13(a)(9)
II. Language Notifying Buyer of Option to Cancel Contract Sec.
1710.15(b)(5)(i)
III. Sample Lot Information Statement and Sample Receipt Sec.
1710.15(b)(11)
IV. Request for Multiple Site Subdivision Exemption Sec.
1710.15(c)(1)
V. Request for Regulatory Exemption Order Sec. 1710.16(c)
VI. Developer's Affirmation for Advisory Opinion Sec. 1710.17(b)(3)
VII. Initial and Consolidated Registration Fee Schedule Sec.
1710.35(b)
VIII. Property Report Sec. 1710.100(b)
IX. Sample Page for Statement of Record Sec. 1710.102(e)
[[Page 79487]]
X. Language for Warning on Cover Page of Property Report Sec.
1710.105(c)
XI. Sample Entry in Table of Contents for Statement of Record Sec.
1710.106(a)
XII. Required Paragraphs for Risks of Buying Land Sec. 1710.107(a)
XIII. Format for General Information Sec. 1710.108
XIV. Paragraphs To Be Included in the General Report--Title to the
Property and Land Use Sec. 1710.109(a)(1)
XV. Statement on Release Provisions Sec. 1710.109(c)(2)(i)(A)
XVI. Warning for Release Provisions Sec. 1710.109(c)(2)(i)(C)(1)
XVII. Method and Purpose of Recording Warning Sec.
1710.109(d)(1)(iv)
XVIII. Escrow Statement Disclosure Sec. 1710.109(e)(1)
XIX. Road Chart Sec. 1710.110(b)(3)
XX. Nearby Communities Chart Sec. 1710.110(b)(6)
XXI. Water Chart Form Sec. 1710.111(a)(1)(ii)(B)
XXII. Comfort Station Chart Sec. 1710.111(b)(1)(ii)
XXIII. Sewer Chart Sec. 1710.111(b)(1)(iii)(B)
XXIV. Electric Service Chart Sec. 1710.111(c)(2)
XXV. Recreational Facility Chart Sec. 1710.114(b)
XXVI. Cost Sheet Format Sec. 1710.117(a)
XXVII. Sample Receipt, Agent Certification and Cancellation Page
Sec. 1710.118(a)
XXVIII. Affirmation of Senior Executive Officer Sec. 1710.219
XXIX. Form for Certification for Disclosure Documents Sec.
1710.504(a)(2)
XXX. Language To Be Included on Property Report Cover Page Sec.
1710.558(a)(1)
XXXI. Notice of Revocation Rights Sec. 1710.559(a)(1)
Many procedural rules previously contained in 12 CFR part 1720 have
been eliminated as duplicative of the procedural rules that the Bureau
promulgated in 12 CFR part 1081 earlier this year. Parties proceeding
under ILSA should therefore be generally guided by 12 CFR part 1081 to
the extent ILSA and the procedural rules contained in 12 CFR part 1012
do not address specific procedures.
Conforming edits have also been made to internal cross-references
and addresses for filing applications and notices. Historical
references that are no longer applicable, such as Department of Housing
and Urban Development Act, 42 U.S.C. 3535(d), and references to
effective dates that have passed, have been removed as appropriate.
III. Legal Authority
A. Rulemaking Authority
The Bureau is issuing this interim final rule pursuant to its
authority under ILSA and the Dodd-Frank Act. Effective July 21, 2011,
section 1061 of the Dodd-Frank Act transferred to the Bureau all of the
HUD Secretary's consumer protection functions relating to ILSA.\2\
Accordingly, effective July 21, 2011, the authority of HUD to issue
regulations pursuant to ILSA transferred to the Bureau.\3\
---------------------------------------------------------------------------
\2\ Public Law 111-203, section 1061(b)(7)(A). Effective on the
designated transfer date, July 21, 2011, the Bureau was also granted
``all powers and duties'' that were vested in the HUD Secretary
relating to ILSA on the day before the designated transfer date. Id.
at section 1061(b)(7)(B). Until this and other interim final rules
take effect, existing regulations for which rulemaking authority
transferred to the Bureau continue to govern persons covered by this
rule. See 76 FR 43569 (July 21, 2011).
\3\ Section 1066 of the Dodd-Frank Act grants the Secretary of
the Treasury interim authority to perform certain functions of the
Bureau. Pursuant to that authority, Treasury is publishing this
interim final rule on behalf of the Bureau.
---------------------------------------------------------------------------
ILSA, as amended, directs the Bureau to prescribe regulations to
carry out the purposes of ILSA.\4\ These regulations may contain such
classifications, differentiations, or other provisions, and may provide
for such adjustments and exceptions for any class of transactions, that
in the Bureau's judgment are necessary or proper to effectuate the
purpose of ILSA, facilitate compliance with ILSA, or prevent
circumvention or evasion of ILSA.\5\ In its existing regulations, HUD
has used this ILSA authority to establish extensive rules that promote
the informed purchase of unimproved property and unconstructed
condominiums by mandating disclosures and regulating certain
development practices.\6\
---------------------------------------------------------------------------
\4\ Id. section 1098A(2); 15 U.S.C. 1718.
\5\ Id.
\6\ See 24 CFR parts 1710, 1715 and 1720.
---------------------------------------------------------------------------
B. Authority To Issue an Interim Final Rule Without Prior Notice and
Comment
The Administrative Procedure Act (APA) \7\ generally requires
public notice and an opportunity to comment before promulgation of
regulations.\8\ The APA provides exceptions to notice-and-comment
procedures, however, where an agency for good cause finds that such
procedures are impracticable, unnecessary, or contrary to the public
interest or when a rulemaking relates to agency organization,
procedure, and practice.\9\ The Bureau finds that there is good cause
to conclude that providing notice and opportunity for comment would be
unnecessary and contrary to the public interest under these
circumstances. In addition, substantially all the changes made by this
interim final rule, which were necessitated by the Dodd-Frank Act's
transfer of ILSA authority from HUD to the Bureau, relate to agency
organization, procedure, and practice and are thus exempt from the
APA's notice-and-comment requirements. For example, part 1012 contains
rules of practice. Additional rules of practice contained in HUD's rule
were not restated as unnecessary because the Bureau's rules at 12 CFR
part 1081 will apply.
---------------------------------------------------------------------------
\7\ 5 U.S.C. 551 et seq.
\8\ 5 U.S.C. 553(b), (c).
\9\ 5 U.S.C. 553(b)(3)(A), (B).
---------------------------------------------------------------------------
The Bureau's good cause findings are based on the following
considerations. As an initial matter, HUD's existing regulation was a
result of notice-and-comment rulemaking to the extent required.
Moreover, the interim final rule published today does not impose any
new, substantive obligations on regulated entities. Rather, the interim
final rule makes only non-substantive, technical changes to the
existing text of the regulation, such as renumbering, changing internal
cross-references, and replacing appropriate nomenclature to reflect the
transfer of authority to the Bureau. Given the technical nature of
these changes, and the fact that the interim final rule does not impose
any additional substantive requirements on covered entities, an
opportunity for prior public comment is unnecessary. In addition,
recodifying HUD's regulations to reflect the transfer of authority to
the Bureau will help facilitate compliance with ILSA and its
implementing regulations, and the new regulations will help reduce
uncertainty regarding the applicable regulatory framework. Using
notice-and comment procedures would delay this process and thus be
contrary to the public interest.
The APA generally requires that rules be published not less than 30
days before their effective dates. See 5 U.S.C. 553(d). As with the
notice and comment requirement, however, the APA allows an exception
when ``otherwise provided by the agency for good cause found and
published with the rule.'' 5 U.S.C. 553(d)(3). The Bureau finds that
there is good cause for providing less than 30 days notice here. A
delayed effective date would harm consumers and regulated entities by
needlessly perpetuating discrepancies between the amended statutory
text and the implementing regulation, thereby hindering compliance and
prolonging uncertainty regarding the applicable regulatory
framework.\10\
---------------------------------------------------------------------------
\10\ This interim final rule is one of 14 companion rulemakings
that together restate and recodify the implementing regulations
under 14 existing consumer financial laws (part III.C, below, lists
the 14 laws involved). In the interest of proper coordination of
this overall regulatory framework, which includes numerous cross-
references among some of the regulations, the Bureau is establishing
the same effective date of December 30, 2011 for those rules
published on or before that date and making those published
thereafter (if any) effective immediately.
---------------------------------------------------------------------------
In addition, delaying the effective date of the interim final rule
for 30 days would provide no practical benefit to
[[Page 79488]]
regulated entities in this context and in fact could operate to their
detriment. As discussed above, the interim final rule published today
does not impose any new, substantive obligations on regulated entities.
Instead, the rule makes only non-substantive, technical changes to the
existing text of the regulation. Thus, regulated entities that are
already in compliance with the existing rules will not need to modify
business practices as a result of this rule. To the extent that one-
time modifications to forms are required, the Bureau has provided an
ample implementation period to allow appropriate advance notice and
facilitate compliance without suspending the benefits of the interim
final rule during the intervening period.
C. Section 1022(b)(2) of the Dodd-Frank Act
In developing the interim final rule, the Bureau has conducted an
analysis of potential benefits, costs, and impacts.\11\ The Bureau
believes that the interim final rule will benefit consumers and covered
persons by updating and recodifying Regulations J, K, and L to reflect
the transfer of authority to the Bureau and certain other changes
mandated by the Dodd-Frank Act. This will help facilitate compliance
with ILSA and its implementing regulations and help reduce any
uncertainty regarding the applicable regulatory framework. Although the
interim final rule will require covered entities to modify certain
disclosures to reflect the transfer of authority to the Bureau, as
discussed below, the interim final rule will not impose any new
substantive obligations on consumers or covered persons and is not
expected to have any impact on consumers' access to consumer financial
products and services.
---------------------------------------------------------------------------
\11\ Section 1022(b)(2)(A) of the Dodd-Frank Act addresses the
consideration of the potential benefits and costs of regulation to
consumers and covered persons, including the potential reduction of
access by consumers to consumer financial products or services; the
impact on depository institutions and credit unions with $10 billion
or less in total assets as described in section 1026 of the Dodd-
Frank Act; and the impact on consumers in rural areas. Section
1022(b)(2)(B) requires that the Bureau ``consult with the
appropriate prudential regulators or other Federal agencies prior to
proposing a rule and during the comment process regarding
consistency with prudential, market, or systemic objectives
administered by such agencies.'' The manner and extent to which
these provisions apply to interim final rules and to benefits,
costs, and impacts that are compelled by statutory changes rather
than discretionary Bureau action is unclear. Nevertheless, to inform
this rulemaking more fully, the Bureau performed the described
analyses and consultations.
---------------------------------------------------------------------------
As discussed above in part II of this SUPPLEMENTARY INFORMATION,
the interim final rule republishes 31 model forms and clauses with
references to HUD replaced with the Bureau and HUD addresses replaced
with Bureau addresses. To implement these changes, covered entities may
need to make one-time revisions to document templates they use for ILSA
compliance. The Bureau believes that costs for these changes will be
minimal. It is the Bureau's understanding that a small set of entities
maintain these forms and do so in accessible templates which can easily
be modified on in-house computers.
The interim final rule will have no unique impact on depository
institutions or credit unions with $10 billion or less in assets as
described in section 1026(a) of the Dodd-Frank Act. Also, the interim
final rule will have no unique impact on rural consumers.
In undertaking the process of recodifying Regulations J, K, and L,
as well as regulations implementing thirteen other existing consumer
financial laws,\12\ the Bureau consulted the Federal Deposit Insurance
Corporation, the Office of the Comptroller of the Currency, the
National Credit Union Administration, the Board of Governors of the
Federal Reserve System, the Federal Trade Commission, and the
Department of Housing and Urban Development, including with respect to
consistency with any prudential, market, or systemic objectives that
may be administered by such agencies.\13\ The Bureau also has consulted
with the Office of Management and Budget for technical assistance. The
Bureau expects to have further consultations with the appropriate
Federal agencies during the comment period.
---------------------------------------------------------------------------
\12\ The fourteen laws implemented by this and its companion
rulemakings are: the Consumer Leasing Act, the Electronic Fund
Transfer Act (except with respect to section 920 of that Act), the
Equal Credit Opportunity Act, the Fair Credit Reporting Act (except
with respect to sections 615(e) and 628 of that act), the Fair Debt
Collection Practices Act, Subsections (b) through (f) of section 43
of the Federal Deposit Insurance Act, sections 502 through 509 of
the Gramm-Leach-Bliley Act (except for section 505 as it applies to
section 501(b)), the Home Mortgage Disclosure Act, the Real Estate
Settlement Procedures Act, the S.A.F.E. Mortgage Licensing Act, the
Truth in Lending Act, the Truth in Savings Act, section 626 of the
Omnibus Appropriations Act, 2009, and the Interstate Land Sales Full
Disclosure Act.
\13\ In light of the technical but voluminous nature of this
recodification project, the Bureau focused the consultation process
on a representative sample of the recodified regulations, while
making information on the other regulations available. The Bureau
expects to conduct differently its future consultations regarding
substantive rulemakings.
---------------------------------------------------------------------------
IV. Request for Comment
Although notice and comment rulemaking procedures are not required,
the Bureau invites comments on this notice. Commenters are specifically
encouraged to identify any technical issues raised by the rule. The
Bureau is also seeking comment in response to a notice published at 76
FR 75825 (Dec. 5, 2011) concerning its efforts to identify priorities
for streamlining regulations that it has inherited from other Federal
agencies to address provisions that are outdated, unduly burdensome, or
unnecessary.
V. Regulatory Flexibility Act
The Regulatory Flexibility Act (RFA), as amended by the Small
Business Regulatory Enforcement Fairness Act of 1996, requires each
agency to consider the potential impact of its regulations on small
entities, including small businesses, small governmental units, and
small not-for-profit organizations.\14\ The RFA generally requires an
agency to conduct an initial regulatory flexibility analysis (IRFA) and
a final regulatory flexibility analysis (FRFA) of any rule subject to
notice-and-comment rulemaking requirements, unless the agency certifies
that the rule will not have a significant economic impact on a
substantial number of small entities.\15\ The Bureau also is subject to
certain additional procedures under the RFA involving the convening of
a panel to consult with small business representatives prior to
proposing a rule for which an IRFA is required.\16\
---------------------------------------------------------------------------
\14\ 5 U.S.C. 601 et seq.
\15\ 5 U.S.C. 603, 604.
\16\ 5 U.S.C. 609.
---------------------------------------------------------------------------
The IRFA and FRFA requirements described above apply only where a
notice of proposed rulemaking is required,\17\ and the panel
requirement applies only when a rulemaking requires an IRFA.\18\ As
discussed above in part III, a notice of proposed rulemaking is not
required for this rulemaking.
---------------------------------------------------------------------------
\17\ 5 U.S.C. 603(a), 604(a); 5 U.S.C. 553(b)(B).
\18\ 5 U.S.C. 609(b).
---------------------------------------------------------------------------
In addition, as discussed above, this interim final rule has only a
minor impact on entities subject to Regulations J, K, and L. The rule
imposes no new, substantive obligations on covered entities and will
require only minor, one-time adjustments to certain model forms, as
discussed in part III above. Accordingly, the undersigned certifies
that this interim final rule will not have a significant economic
impact on a substantial number of small entities.
VI. Paperwork Reduction Act
The Bureau may not conduct or sponsor, and a respondent is not
required to respond to, an information
[[Page 79489]]
collection unless it displays a currently valid Office of Management
and Budget (OMB) control number. This rule contains information
collection requirements under the Paperwork Reduction Act (PRA), which
have been previously approved by OMB, and the ongoing PRA burden for
which is unchanged by this rule. There are no new information
collection requirements in this interim final rule. The Bureau's OMB
control number for this information collection is: 3170-0012.
List of Subjects in 12 CFR Parts 1010, 1011 and 1012
Land registration; Reporting requirements; Certification of
substantially equivalent state law; Purchasers' revocation rights;
Unlawful sales practices; Advertising disclaimers; Filing assistance;
and Adjudicatory proceedings.
Authority and Issuance
For the reasons set forth in the preamble, the Bureau of Consumer
Financial Protection adds parts 1010, 1011, and 1012 to Chapter X in
Title 12 of the Code of Federal Regulations to read as follows:
0
1. Add Part 1010 to read as follows:
PART 1010--LAND REGISTRATION (REGULATION J)
Subpart A--General Requirements
Sec.
1010.1 Definitions.
1010.2 [Reserved]
1010.3 General applicability.
1010.4 Exemptions--general.
1010.5 Statutory exemptions.
1010.6 One hundred lot exemption.
1010.7 Twelve lot exemption.
1010.8 Scattered site subdivisions.
1010.9 Twenty acre lots.
1010.10 Single-family residence exemption.
1010.11 Manufactured home exemption.
1010.12 Intrastate exemption.
1010.13 Metropolitan Statistical Area (MSA) exemption.
1010.14 Regulatory exemptions.
1010.15 Regulatory exemption--multiple site subdivision--
determination required.
1010.16 Regulatory exemption--determination required.
1010.17 Advisory opinion.
1010.18 No action letter.
1010.19 [Reserved]
1010.20 Requirements for registering a subdivision--Statement of
Record--filing and form.
1010.21 Effective dates.
1010.22 Statement of record--initial or consolidated.
1010.23 Amendment--filing and form.
1010.24-1010.28 [Reserved]
1010.29 Use of property report--misstatements, omissions or
representation of Bureau approval prohibited.
1010.35 Payment of fees.
1010.45 Suspensions.
Subpart B--Reporting Requirements
1010.100 Statement of Record--format.
1010.101 [Reserved]
1010.102 General instructions for completing the Statement of
Record.
1010.103 Developer obligated improvements.
1010.104 [Reserved]
1010.105 Cover page.
1010.106 Table of contents.
1010.107 Risks of buying land.
1010.108 General information.
1010.109 Title to the property and land use.
1010.110 Roads.
1010.111 Utilities.
1010.112 Financial information.
1010.113 Local services.
1010.114 Recreational facilities.
1010.115 Subdivision characteristics and climate.
1010.116 Additional information.
1010.117 Cost sheet, signature of Senior Executive Officer
1010.118 Receipt, agent certification and cancellation page.
1010.200 Instructions for Statement of Record, Additional
Information and Documentation.
1010.201-1010.207 [Reserved]
1010.208 General information.
1010.209 Title and land use.
1010.210 Roads.
1010.211 Utilities.
1010.212 Financial information.
1010.214 Recreational facilities.
1010.215 Subdivision characteristics and climate.
1010.216 Additional information.
1010.219 Affirmation.
1010.310 Annual report of activity.
Subpart C--Certification of Substantially Equivalent State Law
1010.500 General.
1010.503 Notice of certification.
1010.504 Cooperation among certified states and between certified
states and the Director.
1010.505 Withdrawal of state certification.
1010.506 State/Federal filing requirements.
1010.507 Effect of suspension or withdrawal of certification granted
under Sec. 1010.501(a): Full disclosure requirement.
1010.508 Effect of suspension of certification granted under Sec.
1010.501(b): Sufficient protection requirement.
1010.552 Previously accepted state filings.
1010.556 Previously accepted state filings--amendments and
consolidations.
1010.558 Previously accepted state filings--notice of revocation
rights on property report cover page.
1010.559 Previously accepted state filings--notice of revocation
rights in contracts and agreements.
Appendix to Part 1010: Standard and Model Forms and Clauses
Authority: 12 U.S.C. 5512, 5581; 15 U.S.C. 1718.
Subpart A--General Requirements
Sec. 1010.1 Definitions.
(a) Statutory terms. All terms are used in accordance with their
statutory meaning in 15 U.S.C. 1702, unless otherwise defined in
paragraph (b) of this section or elsewhere in this part.
(b) Other terms. As used in this part:
Act means the Interstate Land Sales Full Disclosure Act, 15 U.S.C.
1701.
Advisory opinion means the formal written opinion of the Director
as to jurisdiction in a particular case or the applicability of an
exemption under Sec. Sec. 1010.5 through 1010.15, based on facts
submitted to the Director.
Available for use means that in addition to being constructed, the
subject facility is fully operative and supplied with any materials and
staff necessary for its intended purpose.
Beneficial property restrictions means restrictions that are
enforceable by the lot owners and are designed to control the use of
the lot and to preserve or enhance the environment and the aesthetic
and economic value of the subdivision.
Date of filing means the date a Statement of Record, amendment, or
consolidation, accompanied by the applicable fee, is received by the
Director.
Good faith estimate means an estimate based on documentary
evidence. In the case of cost estimates, the documentation may be
obtained from the suppliers of the services. In the case of estimates
of completion dates, the documentation may be actual contracts let,
engineering schedules, or other evidence of commitments to complete the
amenities.
ILSRP means the Interstate Land Sales Registration Program.
Lot means any portion, piece, division, unit, or undivided interest
in land located in any state or foreign country, if the interest
includes the right to the exclusive use of a specific portion of the
land.
Owner means the person or entity who holds the fee title to the
land and has the power to convey that title to others.
Parent corporation means that entity which ultimately controls the
subsidiary, even though the control may arise through any series or
chain of other subsidiaries or entities.
Principal means any person or entity holding at least a 10 percent
financial or ownership interest in the developer or owner, directly or
through any series or chain of subsidiaries or other entities.
Rules means all rules adopted pursuant to the Act, including the
[[Page 79490]]
general requirements published in this part.
Sale means any obligation or arrangement for consideration to
purchase or lease a lot directly or indirectly. The terms ``sale'' or
``seller'' include in their meanings the terms ``lease'' and
``lessor''.
Senior Executive Officer means the individual of highest rank
responsible for the day-to-day operations of the developer and who has
the authority to bind or commit the developing entity to contractual
obligations.
Site means a group of contiguous lots, whether such lots are
actually divided or proposed to be divided. Lots are considered to be
contiguous even though contiguity may be interrupted by a road, park,
small body of water, recreational facility, or any similar object.
Start of construction means breaking ground for building a
facility, followed by diligent action to complete the facility.
Sec. 1010.2 [Reserved]
Sec. 1010.3 General applicability.
Except in the case of an exempt transaction, a developer may not
sell or lease lots in a subdivision, making use of any means or
instruments of transportation or communication in interstate commerce,
or of the mails, unless a Statement of Record is in effect in
accordance with the provisions of this part. In non-exempt
transactions, the developer must give each purchaser a printed Property
Report, meeting the requirements of this part, in advance of the
purchaser's signing of any contract or agreement for sale or lease.
Information collection requirements contained in this part have been
approved by the Office of Management and Budget under the provisions of
44 U.S.C. 3501 et seq. and have been assigned OMB Control No. 3170-
0012.
Sec. 1010.4 Exemptions--general.
(a) The exemptions available under Sec. Sec. 1010.5 through
1010.16 are not applicable when the method of sale, lease or other
disposition of land or an interest in land is adopted for the purpose
of evasion of the Act.
(b) With the exception of the sales or leases which are exempt
under Sec. 1010.5, the anti-fraud provisions of the Act (15 U.S.C.
1703(a)(2)) apply to exempt transactions. The anti-fraud provisions
make it unlawful for a developer or agent to employ any device, scheme,
or artifice to:
(1) Defraud;
(2) To obtain money or property by means of any untrue statement of
a material fact, or
(3) To omit to state a material fact necessary in order to make the
statements made not misleading, with respect to any information
pertinent to the lot or subdivision; or
(4) To engage in any transaction, practice, or course of business
which operates or would operate as a fraud or deceit upon a purchaser.
(c) The anti-fraud provisions of the Act require that certain
representations be included in the contract in transactions which are
not exempt under Sec. 1010.5. Specifically, the Act requires that if a
developer or agent represents that roads, sewers, water, gas or
electric service or recreational amenities will be provided or
completed by the developer, the contract must stipulate that the
services or amenities will be provided or completed. See Sec.
1011.15(f).
(d) Eligibility for exemptions available under Sec. Sec. 1010.5
through 1010.14 is self-determining. With the exception of the
exemptions available under Sec. Sec. 1010.15 and 1010.16, a developer
is not required to file notice with or obtain the approval of the
Director in order to take advantage of an exemption. If a developer
elects to take advantage of an exemption, the developer is responsible
for maintaining records to demonstrate that the requirements of the
exemption have been met.
(e) A developer may present evidence, or otherwise discuss, in an
informal hearing before the Office of Nonbank Supervision, the Bureau's
position on the jurisdiction or non-exempt status of a particular
subdivision.
Sec. 1010.5 Statutory exemptions.
A listing of the statutory exemptions is contained in 15 U.S.C.
1703. In accordance with 15 U.S.C. 1703(a)(2), if the sale involves a
condominium or multi-unit construction, a presale clause conditioning
the sale of a unit on a certain percentage of sales of other units is
permissible if it is legally binding on the parties and is for a period
not to exceed 180 days. However, the 180-day provision cannot extend
the 2-year period for performance. The permissible 180 days is
calculated from the date the first purchaser signs a sales contract in
the project or, if a phased project, from the date the first purchaser
signs the first sales contract in each phase.
Sec. 1010.6 One hundred lot exemption.
The sale of lots in a subdivision is exempt from the registration
requirements of the Act if, since April 28, 1969, the subdivision has
contained fewer than 100 lots, exclusive of lots which are exempt from
jurisdiction under Sec. 1010.5. In the sale of lots in the subdivision
that are not exempt under Sec. 1010.5, the developer must comply with
the Act's anti-fraud provisions, set forth in Sec. 1010.4(b) and (c).
Sec. 1010.7 Twelve lot exemption.
(a) The sale of lots is exempt from the registration requirements
of the Act if, beginning with the first sale after June 20, 1980, no
more than twelve lots in the subdivision are sold in the subsequent
twelve-month period. Thereafter, the sale of the first twelve lots is
exempt from the registration requirements if no more than twelve lots
were sold in each previous twelve month period which began with the
anniversary date of the first sale after June 20, 1980.
(b) A developer may apply to the Director to establish a different
twelve month period for use in determining eligibility for the
exemption and the Director may allow the change if it is for good cause
and consistent with the purpose of this section.
(c) In determining eligibility for this exemption, all lots sold or
leased in the subdivision after June 20, 1980, are counted, whether or
not the transactions are otherwise exempt. Sales or leases made prior
to June 21, 1980, are not considered in determining eligibility for the
exemption.
(d) The sale must also comply with the anti-fraud provisions of
Sec. 1010.4(b) and (c) of this part.
Sec. 1010.8 Scattered site subdivisions.
(a) The sale of lots in a subdivision consisting of noncontiguous
parts is exempt from the registration requirements of the Act if:
(1) Each noncontiguous part of the subdivision contains twenty or
fewer lots; and
(2) Each purchaser or purchaser's spouse makes a personal, on-the-
lot inspection of the lot purchased prior to signing a contract.
(b) For purposes of this exemption, interruptions such as roads,
parks, small bodies of water or recreational facilities do not serve to
break the contiguity of parts of a subdivision.
(c) The sale must also comply with the anti-fraud provisions of
Sec. 1010.4(b) and (c) of this part.
Sec. 1010.9 Twenty acre lots.
(a) The sale of lots in a subdivision is exempt from the
registration requirements of the Act if, since April 28, 1969, each lot
in the subdivision has contained at least twenty acres. In determining
eligibility for the exemption, easements for ingress and egress or
public utilities are considered part of the total acreage of the lot if
the
[[Page 79491]]
purchaser retains ownership of the property affected by the easement.
(b) The sale must also comply with the anti-fraud provisions of
Sec. 1010.4(b) and (c) of this part.
Sec. 1010.10 Single-family residence exemption.
(a) General. The sale of a lot which meets the requirements
specified under paragraphs (b) and (c) of this section is exempt from
the registration requirements of the Act.
(b) Subdivision requirements. (1) The subdivision must meet all
local codes and standards.
(2) In the promotion of the subdivision there must be no offers, by
direct mail or telephone solicitation, of gifts, trips, dinners or use
of similar promotional techniques to induce prospective purchasers to
visit the subdivision or to purchase a lot.
(c) Lot requirements. (1) The lot must be located within a
municipality or county where a unit of local government or the state
specifies minimum standards in the following areas for the development
of subdivision lots taking place within its boundaries:
(i) Lot dimensions.
(ii) Plat approval and recordation.
(iii) Roads and access.
(iv) Drainage.
(v) Flooding.
(vi) Water supply.
(vii) Sewage disposal.
(2) Each lot sold under the exemption must be either zoned for
single-family residences or, in the absence of a zoning ordinance,
limited exclusively by enforceable covenants or restrictions to single-
family residences. Manufactured homes, townhouses, and residences for
one-to-four family use are considered single-family residences for
purposes of this exemption provision.
(3) The lot must be situated on a paved street or highway which has
been built to standards established by the state or the unit of local
government in which the subdivision is located. If the roads are to be
public roads they must be acceptable to the unit of local government
that will be responsible for maintenance. If the street or highway is
not complete, the developer must post a bond or other surety acceptable
to the municipality or county in the full amount of the cost of
completing the street or highway to assure completion to local
standards. For purposes of this exemption, paved means concrete or
pavement with a bituminous surface that is impervious to water,
protects the base and is durable under the traffic load and maintenance
contemplated.
(4) The unit of local government or a homeowners association must
have accepted or be obligated to accept the responsibility for
maintaining the street or highway upon which the lot is situated. In
any case in which a homeowners association has accepted or is obligated
to accept maintenance responsibility, the developer must, prior to
signing of a contract or agreement to purchase, provide the purchaser
with a good faith written estimate of the cost of carrying out the
responsibility over the first ten years of ownership.
(5) At the time of closing, potable water, sanitary sewage
disposal, and electricity must be extended to the lot or the unit of
local government must be obligated to install the facilities within 180
days following closing. For subdivisions which will not have a central
water or sewage disposal system, there must be assurances that an
adequate potable water supply is available year-round and that the lot
is approved for the installation of a septic tank.
(6) The contract of sale must require delivery within 180 days
after the signing of the sales contract of a warranty deed, which at
the time of delivery is free from monetary liens and encumbrances. If a
warranty deed is not commonly used in the jurisdiction where the lot is
located, a deed or grant which warrants that the seller has not
conveyed the lot to another person may be delivered in lieu of a
warranty deed. The deed or grant used must warrant that the lot is free
from encumbrances made by the seller or any other person claiming by,
through, or under the seller.
(7) At the time of closing, a title insurance binder or title
opinion reflecting the condition of title must be in existence and
issued or presented to the purchaser showing that, subject only to
exceptions which are approved in writing by the purchaser at the time
of closing, marketable title to the lot is vested in the seller.
(8) The purchaser or purchaser's spouse must make a personal, on-
the-lot inspection of the lot purchased prior to signing a contract or
agreement to purchase.
(d) The sale must also comply with the anti-fraud provisions of
Sec. 1010.4(b) and (c) of this part.
Sec. 1010.11 Manufactured home exemption.
(a) The sale of a lot is exempt from the registration requirements
of the Act when the following eligibility requirements are met:
(1) The lot is sold as a homesite by one party and a manufactured
home is sold by another party and the contracts of sale:
(i) Obligate the sellers to perform, contingent upon the other
seller carrying out its obligations so that a completed manufactured
home will be erected on a completed homesite within two years after the
date the purchaser signed the contract to purchase the lot;
(ii) Provide that all funds received by the sellers are to be
deposited in escrow accounts independent of the sellers until the
transactions are completed;
(iii) Provide that funds received by the sellers will be released
to the buyer upon demand if the lot on which the manufactured home has
been erected is not conveyed within two years; and
(iv) Contain no provisions which restrict the purchaser's remedy of
bringing suit for specific performance.
(2) The homesite is developed in conformance with all local codes
and standards, if any, for manufactured home subdivisions.
(3) At the time of closing:
(i) Potable water and sanitary sewage disposal are available to the
homesite and electricity has been extended to the lot line;
(ii) The homesite is accessible by roads;
(iii) The purchaser receives marketable title to the lot; and
(iv) Other common facilities represented in any manner by the
developer or agent to be provided are completed or there are letters of
credit, cash escrows or surety bonds in the form acceptable to the
local government in an amount equal to 100 percent of the estimated
cost of completion. Corporate bonds are not acceptable for purposes of
the exemption.
(4) For purposes of this section, a manufactured home is a unit
receiving a label in conformance with U.S. Department of Housing and
Urban Development (HUD) regulations implementing the National
Manufactured Housing Construction and Safety Standards Act of 1974 (42
U.S.C. 5401).
(b) The sale must also comply with the anti-fraud provisions of
Sec. 1010.4(b) and (c) of this part.
Sec. 1010.12 Intrastate exemption.
(a) Eligibility requirements. The sale of a lot is exempt from the
registration requirements of the Act if the following requirements are
met:
(1) The sale of lots in the subdivision after December 20, 1979, is
restricted solely to residents of the state in which the subdivision is
located unless the sale is exempt under Sec. 1010.5, Sec. 1010.11, or
Sec. 1010.13.
(2) The purchaser or purchaser's spouse makes a personal on-the-lot
inspection of the lot to be purchased before signing a contract.
[[Page 79492]]
(3) Each contract:
(i) Specifies the developer's and purchaser's responsibilities for
providing and maintaining roads, water and sewer facilities and any
existing or promised amenities;
(ii) Contains a good faith estimate of the year in which the roads,
water and sewer facilities and promised amenities will be completed;
and
(iii) Contains a non-waivable provision giving the purchaser the
opportunity to revoke the contract until at least midnight of the
seventh calendar day following the date the purchaser signed the
contract. If the purchaser is entitled to a longer revocation period by
operation of state law, that period becomes the Federal revocation
period and the contract must reflect the requirements of the longer
period.
(4) The lot being sold is free and clear of all liens, encumbrances
and adverse claims except the following:
(i) Mortgages or deeds of trust which contain release provisions
for the individual lot purchased if:
(A) The contract of sale obligates the developer to deliver, within
180 days, a warranty deed (or its equivalent under local law), which at
the time of delivery is free from any monetary liens or encumbrances;
and
(B) The purchaser's payments are deposited in an escrow account
independent of the developer until a deed is delivered.
(ii) Liens which are subordinate to the leasehold interest and do
not affect the lessee's right to use or enjoy the lot.
(iii) Property reservations which are for the purpose of bringing
public services to the land being developed, such as easements for
water and sewer lines.
(iv) Taxes or assessments which constitute liens before they are
due and payable if imposed by a state or other public body having
authority to assess and tax property or by a property owners'
association.
(v) Beneficial property restrictions that are mutually enforceable
by the lot owners in the subdivision. Restrictions, whether separately
recorded or incorporated into individual deeds, must be applied
uniformly to every lot or group of lots. To be considered beneficial
and enforceable, any restriction or covenant that imposes an assessment
on lot owners must apply to the developer on the same basis as other
lot owners. Developers who maintain control of a subdivision through a
Property Owners' Association, Architectural Control Committee,
restrictive covenant or otherwise, shall transfer such control to the
lot owners no later than when the developer ceases to own a majority of
total lots in, or planned for, the subdivision. Relinquishment of
developer control shall require affirmative action, usually in the form
of an election based upon one vote per lot.
(vi) Reservations contained in United States land patents and
similar Federal grants or reservations.
(5) Prior to the sale the developer discloses in a written
statement to the purchaser all qualifying liens, reservations, taxes,
assessments and restrictions applicable to the lot purchased. The
developer must obtain a written receipt from the purchaser
acknowledging that the statement required by this subparagraph was
delivered to the purchaser.
(6) Prior to the sale the developer provides in a written statement
good faith estimates of the cost to the purchaser of providing
electric, water, sewer, gas and telephone service to the lot. The
estimates for unsold lots must be updated every two years or more
frequently if the developer has reason to believe that significant cost
increases have occurred. The dates on which the estimates were made
must be included in the statement. The developer must obtain a written
receipt from the purchaser acknowledging that the statement required by
this subparagraph was delivered to the purchaser.
(b) Intrastate Exemption Statement. To satisfy the requirements of
paragraphs (a)(5) and (6) of this section, an Intrastate Exemption
Statement containing the information prescribed in each such paragraph
shall be given to each purchaser. A State-approved disclosure document
may be used to satisfy this requirement if all the information required
by paragraphs (a)(5) and (6) of this section is included in this
disclosure. In such a case, the developer must obtain a written receipt
from the purchaser and comply with all other requirements of the
exemption. To be acceptable for purposes of the exemption, the
statement(s) given to purchasers must contain neither advertising nor
promotion on behalf of the developer or subdivision nor references to
the Bureau of Consumer Financial Protection or the Consumer Financial
Protection Bureau. A sample Intrastate Exemption Statement is included
in the exemption guidelines.
(c) The sale must also comply with the anti-fraud provisions of
Sec. 1010.4(b) and (c) of this part.
Sec. 1010.13 Metropolitan Statistical Area (MSA) exemption.
(a) Eligibility requirements. The sale of a lot which meets the
following requirements is exempt from registration requirements of the
Act:
(1) The lot is in a subdivision which contains fewer than 300 lots
and has contained fewer than 300 lots since April 28, 1969.
(2) The lot is located within a Metropolitan Statistical Area (MSA)
as defined by the Office of Management and Budget and characterized in
paragraph (b) of this section.
(3) The principal residence of the purchaser is within the same MSA
as the subdivision.
(4) The purchaser or purchaser's spouse makes a personal on-the-lot
inspection of the lot to be purchased prior to signing a contract or
agreement.
(5) Each contract:
(i) Specifies the developer's and purchaser's responsibilities for
providing and maintaining roads, water and sewer facilities and any
existing or promised amenities;
(ii) Contains a good faith estimate of the year in which the roads,
water and sewer facilities and promised amenities will be completed;
(iii) Contains a nonwaivable provision giving the purchaser the
opportunity to revoke the contract until at least midnight of the
seventh calendar day following the date the purchaser signed the
contract, or, if the purchaser is entitled to a longer revocation
period by operation of state law, that period becomes the Federal
revocation period and the contract must reflect the requirements of the
longer period.
(6) The lot being sold must be free and clear of liens such as
mortgages, deeds of trust, tax liens, mechanics' liens, or judgments.
For purposes of this exemption, the term liens does not include the
following:
(i) Mortgages or deeds of trust which contain release provisions
for the individual lot purchased if:
(A) The contract of sale obligates the developer to deliver, within
180 days, a warranty deed (or its equivalent under local law), which at
the time of delivery is free from any monetary liens or encumbrances;
and
(B) The purchaser's payments are deposited in an escrow account
independent of the developer until a deed is delivered.
(ii) Liens which are subordinate to the leasehold interest and do
not affect the lessee's right to use or enjoy the lot.
(iii) Property reservations which are for the purpose of bringing
public services to the land being developed, such as easements for
water and sewer lines.
(iv) Taxes or assessments which constitute liens before they are
due and payable if imposed by a state or other
[[Page 79493]]
public body having authority to assess and tax property or by a
property owners' association.
(v) Beneficial property restrictions that are mutually enforceable
by the lot owners in the subdivision. Restrictions, whether separately
recorded or incorporated into individual deeds, must be applied
uniformly to every lot or group of lots. To be considered beneficial
and enforceable, any restriction or covenant that imposes an assessment
on lot owners must apply to the developer on the same basis as other
lot owners. Developers who maintain control of a subdivision through a
Property Owners' Association, Architectural Control Committee,
restrictive covenants, or otherwise, shall transfer such control to the
lot owners no later than when the developer ceases to own a majority of
total lots in, or planned for, the subdivision. Relinquishment of
developer control shall require affirmative action, usually in the form
of an election based upon one vote per lot.
(vi) Reservations contained in United States land patents and
similar Federal grants or reservations.
(7) Before the sale the developer gives a written MSA Exemption
Statement to the purchaser and obtains a written receipt acknowledging
that the statement was received. A sample MSA Exemption Statement is
included in the exemption guidelines. A State-approved disclosure
document may be used to satisfy this requirement if all of the
information required by this section is included. The statement(s)
given to purchasers must contain neither advertising nor promotion on
behalf of the developer or the subdivision nor references to the Bureau
of Consumer Financial Protection or the Consumer Financial Protection
Bureau. In descriptive and concise terms, the statement that the
developer must give the purchaser shall disclose the following:
(i) All liens, reservations, taxes, assessments, beneficial
property restrictions which are enforceable by other lot owners in the
subdivision, and adverse claims which are applicable to the lot to be
purchased.
(ii) Good faith estimates of the cost to the purchaser of providing
electric, water, sewer, gas and telephone service to the lot. The
estimates for unsold lots must be updated every two years, or more
frequently if the developer has reason to believe that significant cost
increases have occurred. The dates on which the estimates were made
must be included in the statement.
(8) The developer executes and gives to the purchaser a written
instrument designating a person within the state of residence of the
purchaser as the developer's agent for service of process. The
developer must also acknowledge in writing that it submits to the legal
jurisdiction of the state in which the purchaser or lessee resides.
(9) The developer executes a written affirmation for each sale made
under this exemption. By January 31 of each year, the developer submits
to the Director a copy of the executed affirmation for each sale made
during the preceding calendar year or a master affirmation in which are
listed all purchasers' names and addresses and the identity of the lots
purchased. Individual affirmations must be available for the Director's
review at all times during the year. The affirmation must be in the
form provided in section I of the appendix to this part: Form for
Developer's Affirmation for Land Sale.
(b) Metropolitan Statistical Area. Metropolitan Statistical Areas
are defined by the Office of Management and Budget generally on the
basis of population statistics reported in a census. To determine
whether a subdivision is located within an MSA and the boundaries of an
MSA, contact the Office of Information and Regulatory Affairs, Office
of Management and Budget, 726 Jackson Place NW., Washington, DC 20503.
(c) The sale must also comply with the anti-fraud provisions of
Sec. 1010.4(b) and (c).
Sec. 1010.14 Regulatory exemptions.
(a) Eligibility requirements. The following transactions are exempt
from the registration requirements of the Act unless the Director has
terminated the exemption in accordance with paragraph (b) of this
section.
(1) The sale of lots, each of which will be sold for less than
$100, including closing costs, if the purchaser will not be required to
purchase more than one lot.
(2) The lease of lots for a term not to exceed five years if the
terms of the lease do not obligate the lessee to renew.
(3) The sale of lots to a person who is engaged in a bona fide land
sales business.
(4) The sale of a lot to a person who owns the contiguous lot which
has a residential, commercial or industrial building on it.
(5) The sale of real estate to a government or government agency.
(6) The sale of a lot to a person who has leased and resided
primarily on the lot for at least the year preceding the sale.
(b) Termination. If the Director has reasonable grounds to believe
that exemption from the registration requirements in a particular case
is not in the public interest, the Director may, after issuing a notice
and giving the respondent an opportunity to request a hearing within
fifteen days of receipt of the notice, terminate eligibility for
exemption. The basis for issuing a notice may be the conduct of the
developer or agent, such as unlawful conduct or insolvency, or adverse
information about the lots or real estate that should be disclosed to
the purchasers. Proceedings will be governed by Sec. 1012.238.
(c) The sale must also comply with the anti-fraud provisions of
Sec. 1010.4(b) and (c) of this part.
Sec. 1010.15 Regulatory exemption--multiple site subdivision--
determination required.
(a) General. (1) The sale of lots contained in multiple sites of
fewer than 100 lots each, offered pursuant to a single common
promotional plan, is exempt from the registration requirements.
(2) For purposes of this exemption, the sale of lots in an
individual site that exceeds 99 lots is not exempt from registration.
Likewise, the sale of lots in a site containing fewer than 100 lots,
where the developer either owns contiguous land or holds an option or
other evidence of intent to acquire contiguous land which, when taken
cumulatively, would or could result in one site of 100 or more lots, is
not exempt from registration. Furthermore, the sale of lots that are
within a subdivision established by a separate developer is not exempt
from registration by this provision.
(b) Eligibility requirements. The sale of each lot must meet the
following requirements to be eligible for this exemption.
(1) The lot is sold ``as is'' with all advertised improvements and
amenities completed and in the condition advertised.
(2) The lot is in conformance with all local codes and standards.
(3) The lot is accessible, both legally and physically. For lots
which are advertised or otherwise represented as ``residential,''
either primary or secondary, with any inference that a permanent or
temporary dwelling unit of any description (excluding collapsible
tents) can be built or installed, physical access must be available by
automobile, pick-up truck or equivalent ``on-road'' vehicle.
(4) At the time of closing, a title insurance binder or title
opinion reflecting the condition of title must be issued to the
purchaser showing that, subject only to exceptions approved in
[[Page 79494]]
writing by the purchaser at the time of closing, marketable title is
vested in the seller.
(5) Each contract or agreement and any promissory notes:
(i) Contain the non-waivable provision found in section II of the
appendix to this part: Language Notifying Buyer of Option to Cancel
Contract in bold face type (which must be distinguished from the type
used for the rest of the document) on the face or signature page above
all signatures. If the purchaser is entitled to a longer revocation
period by operation of state or local law, that period becomes the
Federal revocation period and the contract must reflect the requirement
of the longer period rather than the seven days. The revocation
provisions may not be limited or qualified in the contract or other
document by requiring a specific type of notice or by requiring that
notice be given at a specified place.
(ii) Obligate the developer to deliver, within 180 days, a warranty
deed (or its equivalent under local law) for the lot which at the time
of delivery is free from any monetary liens or encumbrances.
(6) The purchaser or purchaser's spouse makes a personal on-the-lot
inspection of the lot to be purchased before signing a contract.
(7) The purchaser's payments are deposited in an escrow account
independent of the developer until a deed is delivered.
(8) Prior to the purchaser signing a contract or agreement of sale,
the developer discloses in a written Lot Information Statement all
liens, reservations, taxes, assessments, easements and restrictions
applicable to the lot purchased (see paragraph (b)(11) of this
section).
(9) Prior to the purchaser signing a contract or agreement of sale,
the developer discloses in a written Lot Information Statement the
name, address and telephone number of the local governmental agency or
agencies from which information on permits or other requirements for
water, sewer and electrical installations can be obtained. This
Statement will also contain the name, address and telephone number of
the suppliers which would or could provide the foregoing services.
(10) The lot sale must comply with the anti-fraud provisions of 12
CFR 1010.4(b) and (c) and the sales practices and standards in
Sec. Sec. 1011.10 through 1011.28.
(11) A written Lot Information Statement must be delivered to, and
acknowledged by, each purchaser prior to his or her signing a contract
or agreement of sale, and must contain the information shown in the
format below. The Statement must be typed or printed in at least 10
point font. A copy of the acknowledgement will be maintained by the
developer for three years and will be made available to ILSRP upon
request. If the Statement is not delivered as required, the contract or
agreement of sale may be revoked and a full refund paid, at the option
of the purchaser, within two years of the signing date and the contract
or agreement of sale will clearly provide this right. A sample format
for the Statement is provided in section III of the appendix to this
part: Sample Lot Information Statement and Sample Receipt.
(c) Request for Multiple Site Subdivision Exemption. (1) The
developer must file a request for the Multiple Site Subdivision
Exemption. The request must be accompanied by a filing fee of $500
(prepared in accordance with Sec. 1010.35(a)) and a sample Lot
Information Statement, substantially in the form set forth in section
IV of the appendix to this part: Request for Multiple Site Subdivision
Exemption.
(2) This exemption will become effective upon issuance of an
Exemption Order by the Director.
(d) Annual Report. (1) By January 31 of each year the developer
will send a report to the Director listing each site and its location
available for a sale pursuant to the exemption during the preceding
year and indicate the number of lot sales made in each site. The report
will describe any changes in the information provided in the Request
for the Multiple Site Subdivision Exemption or contain a statement that
there are no changes.
(2) The Annual Report must be accompanied by a filing fee of $100.
(3) The Annual Report must be signed and dated by the developer,
attesting to its completeness and accuracy.
(4) Failure to submit the Annual Report within ten days after the
receipt of notice from the Director will automatically terminate
eligibility for the exemption as of the Report due date.
(e) Termination. If, subsequent to the issuance of an Exemption
Order, the Director has reasonable grounds to believe that exemption
from the registration requirements in the particular case is not in the
public interest, the Director may, after issuing a notice and giving
the respondent an opportunity to request a hearing within fifteen days
of receipt of the notice, terminate the exemption order. The basis for
issuing a notice may be apparent omissions or misrepresentations in the
documents submitted to the Director, the conduct of the developer or
agent, such as unlawful conduct or insolvency, or adverse information
about the real estate that should be disclosed to purchasers.
Proceedings will be governed by Sec. 1012.238.
Sec. 1010.16 Regulatory exemption--determination required.
(a) General. The Director may exempt from the registration
requirements of the Act any subdivision or lots in a subdivision by
issuing an order in writing if it is determined that registration is
not necessary in the public interest and for the protection of
purchasers on the basis of the small amount or limited character of the
offering and the requirements contained in paragraph (b) of this
section.
(b) Eligibility requirements. An exemption order may be issued at
the discretion of the Director on the basis of the small amount or
limited character of the offering if the following requirements are
met:
(1) The subdivision or sales substantially meet the requirements of
one of the exemptions available under this chapter.
(2) Each contract:
(i) Specifies the developer's and purchaser's responsibilities for
providing and maintaining roads, water and sewer facilities and any
existing or promised amenities;
(ii) Contains a good faith estimate of the year in which the roads,
water and sewer facilities and promised amenities will be completed;
(iii) Contains a non-waivable provision giving the purchaser the
opportunity to revoke the contract until at least midnight of the
seventh calendar day following the date the purchaser signed the
contract. If the purchaser is entitled to a longer revocation period by
operation of state law, that period becomes the Federal revocation
period and the contract must reflect the requirements of the longer
period.
(iv) Contains a provision that obligates the developer to deliver
to the purchaser within 180 days of the date the purchaser signed the
sales contract, a warranty deed, or its equivalent under local law,
which at the time of delivery is free from any monetary liens or
encumbrances.
(3) The purchaser or purchaser's spouse makes a personal on-the-lot
inspection of the lot to be purchased before signing a contract.
(4) The developer files a request for an exemption order and
supporting documentation in accordance with paragraphs (c) and (d) of
this section and submits a filing fee of $500.00 in
[[Page 79495]]
accordance with Sec. 1010.35(a) of this part. This fee is not
refundable.
(c) Request. The request for an Exemption Order must be
substantially in the format set forth in section V of the appendix to
this part: Request for Regulatory Exemption Order.
(d) Supporting documentation. A request for an exemption order must
be accompanied by the following documentation:
(1) A plat of the entire subdivision with the lots subject to the
exemption request delineated thereon.
(2) A copy of the contract to be used.
(3) A clear and specific statement detailing how the proposed sales
of lots subject to the exemption request substantially complies with
one of the available exemption provisions.
(4) A description of the method by which the lots have been and
will be promoted and to which population centers the promotion has been
and will be directed.
(e) The sale must also comply with the anti-fraud provisions of
Sec. 1010.4(b) and (c) of this part.
(f) Termination. If, subsequent to the issuance of an exemption
order, the Director has reasonable grounds to believe that exemption
from the registration requirements in the particular case is not in the
public interest, the Director may, after issuing a notice and giving
the respondent an opportunity to request a hearing within fifteen days
of receipt of the notice, terminate the exemption order. The basis for
issuing a notice may be apparent omissions or misrepresentations in the
documents submitted to the Director, the conduct of the developer or
agent, such as unlawful conduct or insolvency, or adverse information
about the real estate that should be disclosed to purchasers.
Proceedings will be governed by Sec. 1012.238.
Sec. 1010.17 Advisory opinion.
(a) General. A developer may request an opinion from the Director
as to whether an offering qualifies for an exemption or is subject to
the jurisdiction of the Act.
(b) Requirements. All requests for Advisory Opinions must be
accompanied by the following:
(1) A $500.00 filing fee submitted in accordance with Sec.
1010.35(a). This fee is not refundable.
(2) A comprehensive description of the conditions and operations of
the offering. There is no prescribed format for submitting this
information, but the developer should at least cite the applicable
statutory or regulatory basis for the exemption or lack of jurisdiction
and thoroughly explain how the offering either satisfies the
requirements for exemption or falls outside the purview of the Act.
(3) An affirmation as set forth in section VI of the appendix to
this part: Developer's Affirmation for Advisory Opinion.
Sec. 1010.18 No Action Letter.
(a) If the sale of lots is subject to the registration requirements
of the Act but the circumstances of the sale are such that no
affirmative action to enforce the registration requirements is needed
to protect the public interest or prospective purchasers, the Director
may issue a No Action Letter.
(b) To obtain a No Action Letter a developer must submit a request
which includes a thorough description of the proposed transaction, the
property involved, and the circumstances surrounding the sale.
(c) The issuance of a No Action Letter will not affect any right
which a purchaser has under the Act, and it will not limit future
action by the Director if there is evidence to show that affirmative
action is necessary to protect the public interest or prospective
purchasers. In no event will a No Action Letter be issued after the
sale has occurred.
Sec. 1010.19 [Reserved]
Sec. 1010.20 Requirements for registering a subdivision--Statement of
Record--filing and form.
(a) Filing. In order to register a subdivision and receive an
effective date, the developer or owner of the subdivision must file a
Statement of Record with the Director. The official address to be used
is: CFPB Interstate Land Sales, c/o: Armedia LLC, 8221 Old Courthouse
Road, Suite 206, Vienna, VA 22182. When the Statement of Record is
filed, a fee in the amount set out in Sec. 1010.35(b) must be paid in
accordance with Sec. 1010.35(a).
(b) Form. The Statement of Record shall be in the format specified
in Sec. 1010.100 and shall be completed in accordance with the
instructions in Sec. Sec. 1010.102, 1010.105 through 1010.118,
1010.200, 1010.208 through 1010.216 and 1010.219. It shall be supported
by the documents required by Sec. Sec. 1010.208 through 1010.216 and
1010.219. It shall include any other information or documents which the
Director may require as being necessary or appropriate for the
protection of purchasers.
(c) State filings. A Statement of Record submitted under the
provisions of 12 CFR part 1010, subpart C--Certification of
Substantially Equivalent State Law, shall consist of the materials
designated by the Certification Agreement between the Director and the
certified state in which the subdivision is located.
Sec. 1010.21 Effective dates.
(a) General. The effective date of an initial, consolidated or
amended Statement of Record is the 30th day after the filing of the
latest amendatory material unless the Director notifies the developer
in writing prior to such 30th day that:
(1) The effective date has been suspended in accordance with Sec.
1010.45(a), or
(2) An earlier effective date has been determined.
(b) Suspension of effective date by developer. (1) A developer, or
owner, may request that the effective date of its Statement of Record
be suspended, provided there are no administrative proceedings pending
against either of them at the time the request is submitted. The
request must include any consolidations or amendments which have been
made to the initial Statement of Record. Forms for this purpose will be
furnished by the Director upon request.
(2) Upon acceptance by the Director, the effectiveness of the
Statement of Record shall be suspended as of the date the request was
executed by the developer or owner.
(3) The suspension shall continue until the developer, or owner,
submits all amendments necessary to bring the registration into full
compliance with the Regulations which are in effect on the date of the
amendments and the Director allows those amendments to become
effective.
Sec. 1010.22 Statement of record--initial or consolidated.
(a) Initial Statement of Record. (1) Except in the case of exempt
transactions, an initial Statement of Record shall be filed, and an
effective date issued, prior to selling or leasing any lot in a
subdivision.
(2) If a developer buys from another developer 100 or more lots
from an existing registration, the new developer, or owner, may have to
submit a new initial Statement of Record and receive an effective date
covering the acquired lots prior to selling or leasing any of those
lots.
(3) Changes in principals due to a sale of stock in a corporation
or changes in partners or joint venturers which are accomplished in
accordance with the partnership or joint venture agreement but which do
not cause a change in the title to the land in the subdivision may be
submitted as an amendment.
[[Page 79496]]
(4) Any initial Statement of Record must be accompanied by a fee,
as specified in Sec. 1010.35(b), based upon the number of lots sought
to be registered.
(b) Consolidated Statement of Record. (1) If the developer intends
to sell or lease additional lots as part of the same common promotional
plan with lots already registered, a consolidated Statement of Record
may be submitted for the additional lots. A fee, as specified in Sec.
1010.35(b) and based on the number of additional lots, must accompany
the submission. The additional lots may not be sold or leased until a
new effective date is issued.
(2) If the additional lots are simply the result of a replatting of
lots previously registered and enumerated in the Property Report and do
not include any additional land, the change may be made by an
amendment. However, the amendment must be accompanied by a fee, as
specified in Sec. 1010.35(b), based on the number of additional lots.
(c) Consolidated Statement of Record--Form. A consolidated
Statement of Record shall contain the elements listed in paragraphs
(c)(1) through (4) of this section. Pages having no changes and
documents in previous submissions which apply equally to the additional
lots may be included by reference. However, the developer may, at its
option, submit the entire format for an initial filing, including
copies of previously submitted documents, to expedite the examination
process.
(1) Those pages of the Property Report portion and Additional
Information and Documentation portion which contain changes which have
occurred since the last effective submission, and
(2) A recapitulation or listing of each of the section headings,
and subheadings if necessary, of the Additional Information and
Documentation portion. Each item of the listing shall contain a
statement as to whether or not any change is made in the section;
whether any new or additional information is being submitted and, if
documentation is added by cross reference, the previous submission in
which that documentation may be found, and
(3) Documentation to support the additional lots (e.g., plat maps,
topographic maps and general plan to reflect new lots, title
information, permits for additional facilities, financial assurances of
completion of additional facilities, financial statements) or updated
or expanded documents in support of previous submissions, and
(4) The affirmation required by Sec. 1010.219.
(d) Consolidated Statement of Record amends prior Statement of
Record. A Consolidated Statement of Record shall contain all applicable
information for all registered lots in the subdivision except those
deleted pursuant to other provisions in these regulations. The
resulting Property Report shall be used for all sales in the
subdivision, except for those transactions which are exempt from the
provisions of the Act or which have been granted an exempt status by
the Director, unless the Director has specifically authorized the use
of multiple Property Reports.
(e) Initial Statement of Record--when prior approval to submit is
required. In those subdivisions where there is a disparity between the
lots already registered and those sought to be registered because of
location, terrain, proposed use of the lots or the amenities to be
furnished or available, the developer may present a resume of the
differences and request the Director's permission to file a separate
initial Statement of Record for the additional lots. Upon consideration
of the facts submitted, the Director may allow such a procedure.
(f) Lots which have been deleted from registration. Should the
developer, for any reason, delete by amendment any registered lots from
an effective Statement of Record, those lots must be reregistered by a
consolidation and a new effective date issued, before they can be sold
or leased. An appropriate fee must accompany the submission.
(g) Lots sold to individual purchasers. It is not necessary to
delete from the registration those lots which have been sold to
individual purchasers for their own use.
Sec. 1010.23 Amendment--filing and form.
(a) Filing. If any change occurs in any representation of material
fact required to be stated in an effective Statement of Record, an
amendment shall be filed. The amendment shall be filed within 15 days
of the date on which the developer knows, or should have known, that
there has been a change in material fact.
(b) Form. An amendment shall include by reference the prior
Statement of Record except for any changes in material fact. A change
in material fact shall be specifically described and supported by the
same documentation which would be required for an initial submission.
Any amendment shall be accompanied by:
(1) A letter from the developer giving a clear and concise
description of the purpose and significance of the amendment and
referring to the section and page of the Statement of Record which is
being amended, and
(2) All pages of the Statement of Record, which have been amended,
retyped in the required format to reflect the changes. The ILSRP number
of the Statement of Record shall appear at the top of each page of the
material submitted.
(c) Amendments to suspended filings. Developers wishing to
reactivate a suspended filing shall file the following:
(1) Any amendments necessary to bring the filing into compliance,
submitted in accordance with paragraphs (a) and (b) of this section;
(2) An activity report in the form prescribed by Sec. 1010.310;
and
(3) An amendment fee, if required under Sec. 1010.35(d)(2).
Sec. Sec. 1010.24-1010.28 [Reserved]
Sec. 1010.29 Use of property report--misstatements, omissions, or
representation of Bureau approval prohibited.
Nothing in these regulations shall be construed to authorize or
approve the use of a property report containing any untrue statement of
a material fact or omitting to state a material fact required to be
stated therein. Nor shall anything in these regulations be construed to
authorize or permit any representation that the Property Report is
prepared or approved by the Director, ILSRP or the Bureau of Consumer
Financial Protection.
Sec. 1010.35 Payment of fees.
(a) Method of payment. (1) Each fee must be paid by:
(i) Certified check, cashier's check, or postal money order made
payable to the Treasurer of the United States, with the registration
number, when known, and the name, of the subdivision on the face of the
check, and mailed to an address specified by the Director; or
(ii) Electronic payment in a manner specified by the Director.
(2) Information regarding the current mailing address or electronic
payment procedures is available from: Office of Nonbank Supervision,
Bureau of Consumer Financial Protection,1700 G Street NW., Washington,
DC 20006.
(b) Fees for registration. The fee for each initial and
consolidated registration is set forth in section VII of the appendix
to this part: Initial and Consolidated Registration Fee Schedule.
(c) Fee for Exemption Order or Advisory Opinion. The filing fee for
an Exemption Order or an Advisory Opinion (Sec. 1010.16 or Sec.
1010.17) is $500. This fee is not refundable.
(d) Amendment fee. (1) A fee of $800 is charged when an Annual
Activity Report reflects an annual ending
[[Page 79497]]
inventory of 101 or more unsold registered lots.
(2) A fee of $800 is charged for an amendment to reactivate a
Statement of Record subsequent to its suspension, unless the developer
has 100 or fewer unsold lots included in the Statement of Record.
Sec. 1010.45 Suspensions.
(a) Suspension notice--prior to effective date. (1) If it appears
to the Director that a Statement of Record or an amendment is on its
face incomplete or inaccurate in any material respect, the Director
shall so advise the developer, by issuing a suspension notice, within a
reasonable time after the filing of such materials but prior to the
time the materials would otherwise be effective.
(2) A suspension notice issued pursuant to this subsection shall
suspend the effective date of the Statement of Record or the amendment.
It shall continue in effect until 30 days, or such earlier date as the
Director may determine, after the necessary amendments are submitted
which correct all deficiencies cited in the notice.
(3) Upon receipt of a suspension notice, the developer has 15 days
in which to request a hearing. If a hearing is requested, it shall be
held within 20 days of the receipt of the request by the Director.
(b) Suspension orders--subsequent to effective date. (1) A notice
of proceedings to suspend an effective Statement of Record may be
issued to a developer if the Director has reasonable grounds to believe
that an effective Statement of Record includes an untrue statement of a
material fact, or omits a material fact required by the Act or rules
and regulations, or omits a material fact which is necessary to make
the statements therein not misleading. The Director may, after notice,
and after opportunity for a hearing requested pursuant to Sec.
1012.220 within 15 days of receipt of such notice, issue an order
suspending the Statement of Record. In the event that a suspension
order is issued, such order shall remain in effect until the developer
has amended the Statement of Record or otherwise complied with the
requirements of the order. When the developer has complied with the
requirements of the order, the Director shall so declare and thereupon
the suspension order shall cease to be effective.
(2) If the Director undertakes an examination of a developer or its
records to determine whether a suspension order should be issued, and
the developer fails to cooperate with the Director or obstructs, or
refuses to permit the Director to make such examination, the Director
may issue an order suspending the Statement of Record. Such order shall
remain in effect until the developer has complied with the requirements
of the order. When the developer has complied with the requirements of
the order, the Director shall so declare and thereupon the suspension
order shall cease to be effective. In accordance with the procedure
described in Sec. 1012.235, a hearing may be requested.
(3) Upon receipt of an amendment to an effective Statement of
Record, the Director may issue an order suspending the Statement of
Record until the amendment becomes effective if the Director has
reasonable grounds to believe that such action is necessary or
appropriate in the public interest or for the protection of purchasers.
In accordance with the procedure described in Sec. 1012.235, a hearing
may be requested.
(4) Suspension orders issued pursuant to this subsection shall
operate to suspend the Statement of Record as of the date the order is
either served on the developer or its registered agent or is delivered
by certified or registered mail to the address of the developer or its
authorized agent.
Subpart B--Reporting Requirements
Sec. 1010.100 Statement of Record--format.
(a) The Statement of Record consists of two portions; the Property
Report portion and the Additional Information and Documentation
portion.
(b) General format. The Statement of Record shall be prepared in
accordance with the format set forth in section VIII of the appendix to
this part: Property Report:
Sec. 1010.101 [Reserved]
Sec. 1010.102 General instructions for completing the Statement of
Record.
(a) Paper and type. The Statement of Record shall be on good
quality, unglazed white or pastel paper. Letter size paper,
approximately 8\1/2\ x 11 inches in size, will be used for the Property
Report portion and legal size paper, approximately 8\1/2\ x 14 inches
in size, will be used for the Additional Information and Documentation
portion. Side margins shall be no less than 1 inch and no greater than
1\1/2\ inches. Top and bottom margins shall be no less than 1 inch. In
the preparation of the charts to be included in the Property Report,
the developer may vary from the above margin requirements or print the
charts lengthwise on the required size paper if such measures are
necessary to make the charts readable. The Statement of Record shall be
prepared in an easily readable, uniform font.
(b) Numbering and dating. Each page of the Statement of Record as
submitted to ILSRP shall be numbered and shall include the date of
typing or preparation in the lower right hand corner, except in the
final printed version of the Property Report portion.
(c) Signing. The Statement of Record shall be signed by the senior
executive officer of the developer or a designated agent.
(d) Printing. The Statement of Record and, insofar as practical,
all papers and documents filed as a part thereof, shall be printed,
lithographed, photocopied, typewritten or prepared by any similar
process which, in the opinion of the Director, produces copies suitable
for a permanent record. Irrespective of the process used, all copies of
any such materials shall be clear and easily readable.
(e) Headings, subheadings, captions, introductory paragraphs,
warnings. Property Report subject ``headings'' are those descriptive
introductory words which appear immediately after section numbers
1010.106 through 1010.116 (e.g. Sec. 1010.108 has ``General
Information'' and Sec. 1010.111 has ``Utilities''). Each such heading
shall be printed in the Property Report in underlined capital letters
and centered at the top of a new page. Section numbers shall not be
printed in the Property Report. Property Report subheadings are those
descriptive introductory words which appear in italics in the
regulations at the beginning of paragraphs designated by paragraph
letters (a), (b), (c) etc. An example of a subheading is ``water''
found immediately after the paragraph letter (a) in Sec. 1010.111.
These subheadings will be printed in the Property Report only if they
are relevant to the subject subdivision. If printed these subheadings
shall be capitalized and shall begin at the left hand margin of the
page. Property Report ``captions'' are those descriptive introductory
words which appear in italics in the Regulations at the beginning of
subparagraphs designated by numbers (1), (2), (3), etc. An example of
such captions is ``Sales Contract and Delivery of Deed'' found
immediately after the subparagraph number ``(1)'' in Sec. 1010.109(b).
These captions are to be printed in the Property Report only if they
are applicable to the subject subdivision. If printed, these captions
shall be centered on the page from the side margins, and shall have
only the first letter of each word capitalized.
[[Page 79498]]
Headings and subheadings will be used in the Property Report in
accordance with the sample page appearing in Sec. 1010.102.
Introductory paragraphs will follow headings if they are applicable and
necessary for a readable entry into the subject matters, but note, the
introductory paragraphs for ``Title to the Property and Land Use'' are
to be used in every case as provided in Sec. 1010.109(a)(1).
Subheadings and captions which do not apply to the subdivision should
be omitted from the Property Report portion and answered ``not
applicable'' in the Additional Information and Documentation portion,
unless specifically required to be included elsewhere in these
instructions. Warnings shall be printed substantially as they appear in
the instructions in Sec. Sec. 1010.105 through 1010.118. They shall be
printed in capital letters and enclosed in a box as shown on the sample
page in Sec. 1010.102. The paragraphs in the Property Report portion
need not be numbered. A sample page is set forth in section IX of the
appendix to this part: Sample Page for Statement of Record.
(f) Language style. All information given in the Property Report
portion shall be stated in narrative form using plain, concise,
everyday language which can be readily understood by purchasers who are
unfamiliar with real estate transactions. Excessively long paragraphs
should be avoided. Keep them as brief as possible. Use separate
paragraphs for different points discussed. Disclose all pertinent
facts. Potential consequences to a purchaser must be made clear even
though not specifically asked for in the format and the instructions.
In the Property Report the pronouns ``you'' and ``your'' shall
generally be used in referring to the prospective purchaser and the
pronouns ``we,'' ``us,'' and ``our'' shall generally be used in
referring to the developer. The Director specifically reserves the
right to require modification of the text when the narrative does not
meet the standards of this section.
(g) Format of the Additional Information and Documentation portion
of the Statement of Record. The supporting information and
documentation required by these regulations shall be identified by
affixing a tab on the right side of the cover sheet of the required
information or documentation and by identifying on the tab the section
number of the Statement of Record instructions to which the information
or documentation corresponds. This information or documentation shall
then be placed immediately after the page(s) on which the section
number and answers for that section appear. If the data in a document
is applicable to more than one section of instructions, the developer
may substitute as a document in the second case a statement
incorporating the earlier document. Deeds, title policies, subdivision
plats or maps and other documentary information required to be
contained in the Additional Information and Documentation portion of
the Statement of Record need not be on the same size paper as the
Statement of Record but, if larger, shall be folded to a size no larger
than 8\1/2\ x 14 inches. Supporting documents shall be inserted into
the binding in such a manner as to permit them to be examined without
the necessity of removing them from the binding. This may be
accomplished by proper folding or through the use of envelopes.
(h) Binding. The Statement of Record shall be bound with the
Property Report portion on top, including any documents which may be
required to be attached when delivered to the purchaser, followed by
the Additional Information and Documentation portion.
(i) Advertising and promotional material. No advertising, or
promotional material or statements which are self-serving on behalf of
the developer or owner may be included in the Statement of Record or
resulting Property Report.
(j) Additional information. (1) In addition to the information
expressly required to be stated in the Statement of Record, there shall
be added, and the Director may require, such further material
information, documentation and certification as may be necessary in the
public interest and for the protection of purchasers or necessary in
order to make the statements not misleading in the light of
circumstances under which they are made.
(2) The instructions are not all inclusive. The developer shall
include any other facts which would have a bearing upon the use by the
purchaser of any of the facilities, services or amenities; which would
cause or result in additional expenses to the purchaser; which would
have an effect upon the use and enjoyment of the lot by the purchaser
for the purpose for which it is sold or which would adversely affect
the value of the lot.
(k) Modification of format or content. The Director may require or
permit modification to the content and format of the Property Report to
include additional information, to modify or omit required information,
or to change the sequence or position of information when such changes
are deemed to be in the public interest or for the protection of
purchasers.
(l) Required documentation. Where the documentation required by the
Statement of Record cannot be obtained, the Director may permit the
best available alternative documentation to be substituted.
(m) Final version of property report. On the date that a Statement
of Record becomes effective, the Property Report portion shall become
the Property Report for the subject subdivision. The version of the
Property Report delivered to prospective lot purchasers shall be
verbatim to that found effective by the Director and shall have no
covers, pictures, emblems, logograms or identifying insignia other than
as required by these regulations. It shall meet the same standards as
to grade of paper, type size, margins, style and color of print as
those set herein for the Statement of Record, except where required
otherwise by these regulations. However, the date of typing or
preparation of the pages and the ILSRP number shall not appear in the
final version. If the final version of the Property Report is
commercially printed, or photocopied by a process which results in a
commercial printing quality, and is bound on the left side, both sides
of the pages may be used for printed material. If it is typed or
photocopied by a process which does not result in a clear and legible
product on both sides of the page or is bound at the top, printing
shall be done on only one side of the page. Three copies of the final
version of the Property Report, in the exact form in which it is
delivered to prospective lot purchasers, shall be sent to ILSRP Office
within 20 days of the date on which the Statement of Record, amendment,
or consolidation is allowed to become effective by the Director. If a
Property Report in a foreign language is used as required by Sec.
1011.25(g), three copies of that Property Report together with copies
of the translated documents shall be furnished the Director within 20
days of the date on which the advertising is first used. A Property
Report prepared pursuant to these regulations shall not be distributed
to potential lot purchasers until after the Statement of Record of
which it is a part or any amendment to that Statement of Record has
been made effective by the Director.
Sec. 1010.103 Developer obligated improvements.
(a) If the developer represents either orally or in writing that it
will provide or complete roads or facilities for water, sewer, gas,
electricity or recreational amenities, it must be contractually
[[Page 79499]]
obligated to do so (see Sec. 1011.15(f)), and the obligation shall be
clearly stated in the Property Report. While the developer may disclose
relevant facts about completion, the obligation to complete cannot be
conditioned, other than as provided for in Sec. 1011.15(f), and an
estimated completion date (month and year) must be stated in the
Property Report. However, a developer that has only tentative plans to
complete may so state in the Property Report, provided that the
statement clearly identifies conditions to which the completion of the
facilities are subject and states that there are no guarantees the
facilities will be completed.
(b) If a party other than the developer is responsible for
providing or completing roads or facilities for water, sewer, gas,
electricity or recreational amenities, that entity shall be clearly
identified in the Property Report under the categories described in
Sec. 1010.110, Sec. 1010.111 or Sec. 1010.114, as applicable. A
statement shall be included in the proper section of the Property
Report that the developer is not responsible for providing or
completing the facility or amenity and can give no assurance that it
will be completed or available for use.
Sec. 1010.104 [Reserved]
Sec. 1010.105 Cover page.
The cover page of the Property Report shall be prepared in
accordance with the following directions:
(a) The margins shall be at least 1 inch.
(b) The next 3 inches shall contain a warning, centered, in \1/2\
inch capital letters in red type with \1/4\ inch space between the
lines which reads as follows: ``READ THIS PROPERTY REPORT BEFORE
SIGNING ANYTHING''.
(c) The remainder of the page shall contain the language set forth
in section X of the appendix to this part: Language for Warning on
Cover Page of Property Report beginning \1/4\-inch below the last line
of the warning.
(d)(1) If the purchaser is entitled to a longer revocation period
by operation of state law, that period becomes the Federal revocation
period and the Cover Page must reflect the requirements of the longer
period, rather than the seven days.
(2)(i) If a deed is not delivered within 180 days of the signing of
the contract or agreement of sale or unless certain provisions are
included in the contract or agreement, the purchaser is entitled to
cancel the contract within two years from the date of signing the
contract or agreement.
(ii) The deed must be a warranty deed, or where such a deed is not
commonly used, a similar deed legally acceptable in the jurisdiction
where the lot is located. The deed must be free and clear of liens and
encumbrances.
(iii) The contract provisions are:
(A) A legally sufficient and recordable lot description; and
(B) A provision that the seller will give the purchaser written
notification of purchaser's default or breach of contract and the
opportunity to have at least 20 days from the receipt of notice to
correct the default or breach; and
(C) A provision that, if the purchaser loses rights and interest in
the lot because of the purchaser's default or breach of contract after
15% of the purchase price, exclusive of interest, has been paid, the
seller shall refund to the purchaser any amount which remains from the
payments made after subtracting 15% of the purchase price, exclusive of
interest, or the amount of the seller's actual damages, whichever is
the greater.
(iv) If a deed is not delivered within 180 days of the signing of
the contract or if the necessary provisions are not included in the
contract, the following statement shall be used in place of any other
rescission language: ``Under Federal law you may cancel your contract
or agreement of sale any time within two years from the date of
signing.''
(e) At the time of submission, the developer may indicate its
intention to comply with the red printing by an illustration or by a
statement to that effect.
(f) The ``Date of This Report'' shall be the date on which the
Director allows the Statement of Record to become effective and shall
not be entered until the submission has become effective.
Sec. 1010.106 Table of contents.
(a) The second page(s) shall consist of a Table of Contents which
lists the headings in the Property Report, the major subheadings, if
any, and the page on which they appear. An example is set forth in
section XI of the appendix to this part: Sample Entry in Table of
Contents for Statement of Record.
(b) Use of ``You'' and ``We.'' At the end of the Table of Contents
insert the following remark: ``In this Property Report, the words
``you'' and ``your'' refer to the buyer. The words ``we,'' ``us'' and
``our'' refer to the developer.''
Sec. 1010.107 Risks of buying land.
(a) The next page shall be headed ``Risks of Buying Land'' and
shall contain the paragraphs listed in section XII of the appendix to
this part: Required Paragraphs for Risks of Buying Land.
(b) Warnings. If the instructions of the Director require any
warnings to be included in the Property Report portion, the following
statement shall be added beneath the ``Risks of Buying Land'' under a
heading ``Warnings'': ``Throughout this Property Report there are
specific warnings concerning the developer, the subdivision or
individual lots. Be sure to read all warnings carefully before signing
any contract or agreement.'' Both the heading, ``Warnings,'' and the
statement shall be printed in capital letters and enclosed in a box.
Sec. 1010.108 General information.
Insert and complete the format set forth in section XIII of the
appendix to this part: Format for General Information.
Sec. 1010.109 Title to the property and land use.
(a) General instructions.(1) Below the heading ``Title to the
Property and Land Use'' insert the introductory paragraphs set forth in
section XIV of the appendix to this part: Paragraphs to be included in
the General Report--Title to the Property and Land Use.
(2) Information to be provided. After the above introductory
paragraphs provide the information required by the following
instructions and questions. Follow a general form identical to the
sample page set forth in section IX of the appendix to this part:
Sample Page for Statement of Record.
(b) Method of sale: (1) Sales contract and delivery of deed. (i)
Will the buyer sign a purchase money or installment contract or similar
instrument in connection with the purchase of the lot? When will a deed
be delivered?
(ii) If an installment contract is used, include the following, or
substantially the same, language in the disclosure narrative under
``Method of Sale'': ``If you fail to make your payments required by the
contract, you may lose your lot and all monies paid.''
(iii) If, at the time of a credit sale, the developer gives the
buyer a deed to the lot, what type of security must the buyer give the
seller?
(iv) If the lots are to be sold on the basis of an installment
contract, can the developer or the owner of the subdivision or their
creditors encumber the lots under contract? If so, include the
following warning in the disclosure narrative under the caption ``Sales
contract and delivery of deed'': ``The (indicate subdivision developer,
owner, or their creditors) can place a mortgage on or encumber the lots
in this subdivision after they are under
[[Page 79500]]
contract. This may cause you to lose your lot and any monies paid on
it.''
(2) Type of deed. What type of deed will be used to convey title to
lots in the subdivision?
(3) Quitclaim deeds. If a quitclaim deed is to be given to lot
purchasers insert the below warning, or a warning which is
substantially the same, in the disclosure narrative below the caption
``Quitclaim Deeds.'' This particular warning may be deleted at the
direction of the Director if an acceptable attorney's opinion is
submitted with the Statement of Record which indicates that a quitclaim
deed has a meaning in the jurisdiction where the subdivision is located
which is substantially contrary to the effect of this warning. This
warning shall be phrased substantially as follows: ``The Quitclaim deed
used to transfer title to lots in this subdivision gives you no
assurance of ownership of your lot.''
(4) Oil, gas, and mineral rights. If oil, gas or mineral rights
have been reserved, insert the following statement or one substantially
the same in the narrative answer under the caption ``oil, gas, and
mineral rights'': ``The (indicate oil, gas, or mineral rights) to
(state which lots) in this subdivision will not belong to the purchaser
of those lots. The exercise of these rights could affect the use,
enjoyment and value of your lot.''
(c) Encumbrances, mortgages and liens. (1) In general. State
whether any of the lots or common facilities which serve the
subdivision, other than recreation facilities, are subject to a blanket
encumbrance, mortgage or lien. If yes, identify the type of encumbrance
(e.g., deed of trust, mortgage, mechanics liens), the holder of the
lien, and the lots covered by the lien. If any blanket encumbrance,
mortgage, or lien is not current in accordance with its terms, so
indicate.
(2) Release provisions. (i) Explain the effect of any release
provisions of any blanket encumbrance, mortgage or lien and include the
one of the following statements that pertains.
(A) If the release clauses are not included in a recorded
instrument, insert the statement set forth in section XV of the
appendix to this part: Statement on Release Provisions, or one
substantially the same in the disclosure narrative below under the
caption ``Release Provisions.''
(B) If the developer or subdivision owner states that the release
provisions are recorded and that the lot purchaser may pay the release
price of the mortgage, the statement shall be supported by
documentation supplied in Sec. 1010.209. If the purchaser may pay the
release fee, state the amount of the release fee and inform the
purchaser that the amount may be in addition to the contract payments
unless there is a bona fide trust or escrow arrangement in which the
purchaser's payments are set aside to pay the release price before any
payments are made to the developer.
(C)(1) If there are no provisions in the blanket encumbrance for
release of an individual purchaser's lot from a blanket encumbrance,
include the warning set forth in section XVI of the appendix to this
part: Warning for Release Provisions or a warning substantially the
same, in the disclosure narrative under the ``Release Provisions''
caption.
(2) If the provisions for release of individual lots from the
blanket encumbrance may be exercised only by the developer insert the
following statement, or one substantially the same, in the disclosure
narrative under the ``Release Provisions'' caption: ``The release
provisions in the (state the type of encumbrance) on (indicate all or
particular lots) in this subdivision may be exercised only by us.
Therefore, if we default on the (state type of encumbrance) before
obtaining a release of your lot, you may lose your lot and any money
you have paid for it.''
(d) Recording the contract and deed. (1) Method or purpose of
recording. (i) State what protection, if any, recording of deeds and
contracts gives a lot purchaser in your jurisdiction.
(ii) If the sales contract or deed may be recorded, so state. Also
state whose responsibility it is to record the contract or deed.
(iii) If the developer or subdivision owner will not have the sales
contract officially acknowledged or if the applicable jurisdiction will
not record sales contracts, state that sales contracts will not be
recorded and why they will not be recorded.
(iv) If at, or immediately after, the signing of a contract, the
contract or a deed transfer to the buyer is not recorded by the
developer or owner or if title to the lot is not otherwise transferred
of record to a trust, or if other sufficient notice of transfer or sale
is not placed of record, then the developer shall include the warning
set forth in section XVII of the appendix to this part: Method and
Purpose of Recording Warning, or substantially the same warning in the
disclosure narrative under the caption ``Method and Purpose of
Recording.'' The reference to contracts shall be deleted from the above
warning if the answer to paragraph (d)(1)(i) of this section indicates
that recording of a contract in the subject jurisdiction does not
protect the purchaser from claims of later purchasers or creditors of
anyone having an interest in the land.
(2) Title insurance. If the developer does not deliver a title
insurance policy to the buyer, state that the purchaser should obtain
an attorney's opinion of title or a title insurance policy which will
describe the rights of ownership which are being acquired in the lot.
Recommend that an appropriate professional should interpret the opinion
or policy.
(e) Payments. (1) Escrow. If purchasers' deposits, down payments,
or installment payments are to be placed in a third party controlled
escrow or similar account, describe the arrangement including the name
and address of the escrow holder or similar person. If there is no such
arrangement, insert the statement set forth in section XVIII of the
appendix to this part: Escrow Statement. The questions regarding an
escrow agreement or similar protection may be answered affirmatively
only if the money is under the control of an independent third party,
allowing a purchaser to receive a return of all money paid in the event
of the developer's failure to convey title or the developer's default
on any obligation which would otherwise result in the purchaser's loss
of that money.
(2) Prepayments. Explain any prepayment penalties or privileges in
everyday language.
(3) Default. What are the developer's or subdivision owners'
remedies against a defaulted purchaser?
(f) Restrictions on the use of your lot. (1) Restrictive covenants
(i) Have any restrictive covenants been recorded against the land in
the subdivision? If so, do they contain items which require the
purchaser to secure permissions, approvals or take any other action
prior to using or disposing of his lot (e.g., architectural control,
developer's right of first refusal, building deadlines, etc.)? If any
of these or similar items are included, explain their meaning and
effect upon the purchaser.
(ii) If any restrictive covenants are to be used and if they have
not been recorded, how will they be imposed? Include a statement to the
effect that the restrictive covenants have not been recorded; that
there is no assurance they will be applied uniformly; that they may be
changed and that they may be difficult to enforce. If no restrictive
covenants will be imposed, include a statement to the effect that,
since there are no restrictive covenants on the use of the lots, they
may be used for purposes which could adversely affect the use and
enjoyment of surrounding lots.
[[Page 79501]]
(iii) If there are restrictive covenants, whether recorded or
unrecorded, the following statement shall be made: ``A complete copy of
these restrictions is available upon request.''
(2) Easements. (i) Are there easements which may have an effect on
the purchaser's building or lot use plans (e.g., large drainage
easements along lot lines, high voltage electric transmission lines,
pipe lines or drainage easements which encroach upon the building area
of the lot or inhibit its use)?
(ii) Is the subdivision subject to any type of flood control or
flowage easements?
(iii) If the answer to either (2)(i) or (2)(ii) is in the
affirmative, identify the affected lots and state the effect upon the
use of the lots.
(g) Plats, zoning, surveying, permits and environment. (1) Plats
(i) Have the subdivision plans and plats of specific units been
approved by the regulatory authorities? If the approvals have not been
obtained, include a warning to the effect that regulatory authorities
have not approved the proposed plats; that they may require significant
alterations before they will approve them and they may not allow the
land to be used for the purpose for which it is being sold.
(ii) Have plats covering the lots in this Report been recorded? If
so, where are they recorded? If they have not been recorded, is the
description of the lots given in this Report legally adequate for the
conveyance of land in the jurisdiction where the subdivision is
located? If it is not, include a statement to the effect that the
description of the lots is not legally adequate for the conveyance of
the lots and that it will not be until the plat is recorded.
(2) Zoning. For what purpose may the lots be used (e.g., single
family homes, camping, commercial)? Does this use conform to local
zoning requirements and the restrictive covenants?
(3) Surveying. Has each lot been surveyed and is each lot marked
for identification? If not, and the purchaser is responsible for the
expense, state the estimated cost.
(4) Permits. Must the purchaser obtain a building permit before
beginning construction on his lot? Where is the permit obtained? Are
any other permits necessary to use the lot for the purpose for which it
is sold or for construction in connection with its use?
(5) Environment. Has there been any environmental impact study
prepared which considers the effect of the subdivision on the
environment? If a study has been prepared, summarize any adverse
conclusions and refer the lot buyer to the proper State Clearinghouse
for complete information. If a study has not been prepared, include a
statement that ``No determination has been made as to the possible
adverse effects the subdivision may have upon the environment and
surrounding area.'' If the developer does not know whether an
environmental impact study has been prepared, or the name and location
of the Office where any study made can be found, inquiry should be made
to the State or Area Clearinghouse established under the authority of
title IV of the Intergovernmental Cooperation Act of 1968.
Sec. 1010.110 Roads.
(a) Access to the subdivision. (1) Is access to the subdivision
provided by public or private roads? What type of surface do they have?
How many lanes? What is the width of the wearing surface?
(2) Who is responsible for their maintenance? What is the cost to
the purchaser, if any? Are any improvements contemplated? If so, when
will they begin and when will they be completed? At whose expense?
(b) Access within the subdivision. (1) How have legal and physical
access by conventional automobile been or will they be, provided to the
lots (e.g., road on recorded easement; right of way dedicated to the
public; right of way dedicated to use of lot owners)?
(2) Who is responsible for the road construction? Is there any
construction cost to the purchaser? Is there any financial assurance of
completion? If there is no financial assurance of completion, enter a
warning to the effect that no funds have been set aside in an escrow or
trust account and there are no other financial arrangements to assure
completion of the roads.
(3) How many lanes do the interior roads have? What is the
estimated starting date of construction (month and year); the present
percentage of construction now complete; the present surface; the
estimated completion date (month and year) and what is the final
surface to be? If there are separate units or sections in the
subdivision which will have different completion dates or different
surfaces, the chart in section XIX of the appendix to this part: Road
Chart shall be used rather than a narrative paragraph.
(4) Who is responsible for road maintenance? If the roads are to be
maintained by a public authority, a property owners' association or
some other entity at some time in the future, who is responsible for
their maintenance during the interim period? What is the cost to the
purchaser during the interim period and after acceptance for permanent
maintenance? Will they be maintained so as to provide access to the
lots on a year round basis? If not, include a warning which informs the
purchaser that access may not be available year round. Identify the
months when access may not be available to lots. If there are no
arrangements for maintenance, include a warning to the effect that
purchasers are responsible for maintaining the roads and that, if
maintenance is not performed, the roads may soon deteriorate and access
may become difficult or impossible.
(5) If estimated completion dates given in prior Statements of
Record have not been met, state that previous dates have not been met
and give the previous dates. Underline the answer. If the roads are 100
percent completed, no dates are needed.
(6) Complete the chart in section XX of the appendix to this part:
Nearby Communities Chart by listing the county seat (identify) and at
least two nearby communities. Include at least one community of
significant size which offers general services.
(7) If the purchasers will be individually responsible for
providing access to their lots and for maintaining that access, what is
the estimated cost of construction and maintenance?
Sec. 1010.111 Utilities.
(a) Water. (1) How is water to be supplied to the individual lots
(e.g., central system or individual wells)? Of the following items only
those which apply to the subdivision need be included.
(i) Individual system. (A) If water is to be supplied by an
individual private well, cistern or other individual system, what are
the total estimated costs of the system, including but not limited to,
the costs of installation, storage, any treatment facilities and other
necessary equipment?
(B) If individual cisterns or similar storage tanks are to be used,
state where water to fill them can be secured; the cost of the water,
and its delivery costs for a supply sufficient to serve the monthly
needs of a family of four living in a house on a year-round basis.
Include a statement to the effect that water stored for extended
periods tends to become stale and may acquire an unpleasant taste or
odor.
(C) If individual wells are to be used and if the sales contract
contains no provisions for refund or exchange in the event a productive
well cannot be installed, include a statement to the effect that there
is no assurance a productive well can be installed and, if
[[Page 79502]]
it cannot, no refund of the purchase price of the lot will be made.
(D) If individual wells or individual cisterns are to be used,
include a brief statement to the effect that the purity and chemical
content of the water cannot be determined until each individual well or
source of water is completed and tested.
(E) If there have been no hydrological surveys in connection with
the use of individual wells or sources of hauled water for cisterns,
include a warning to the effect that there is no assurance of a
sufficient supply of water for the anticipated population.
(F) Is a permit required to install the individual system to be
used? If so, from whom and where is the permit secured? State the cost
of a permit.
(ii) Central system. (A) If water is to be provided by a central
system, who is the supplier? What is the supplier's address?
(B) Will the water mains be extended in front of, or adjacent to,
each lot? When will construction begin? What is the present percentage
of completion of the water mains and central supply plant? When will
service be available to the individual lots? If the central system is
not complete and there are separate units or sections of the
subdivision included in the Statement of Record which have different
completion dates, then the starting date for construction (month and
year), the percentage of construction now complete and the estimated
service availability date (month and year) shall be set forth in the
chart in section XXI of the appendix to this part: Water Chart Form
rather than in a narrative paragraph.
(C) What is the present capacity of the central plant (i.e., how
many connections can be supplied)? If the capacity is not sufficient to
serve all lots in the Statement of Record and is to be expanded in
phases, what is the time-table for each phase to be in service and what
will trigger the beginning of the expansion for each phase? If an
entity other than the developer or an affiliate or subsidiary of the
developer will supply the water for the central system; if the
operation of that entity is supervised by a governmental agency and if
that entity states it can supply the anticipated population of the
development, then information as to the capacity of the plant and a
hydrological survey is not necessary. If the entity does not indicate
it can supply enough water for the anticipated population or if the
capacity of any central system is not sufficient to serve all lots in
the Statement of Record, include a warning which describes the
limitations and sets forth the number of lots which can now be served.
(D) Have there been any hydrological surveys to determine that a
sufficient source of water is available to serve the anticipated
population of the subdivision? Has the water in the central system been
tested for purity and chemical content? If so, did the results show
that the water meets all standards for a public water supply? If there
have been no hydrological surveys showing a sufficient supply of water
or no tests for purity and chemical content for the central system,
include a warning to the effect that there is no assurance of a
sufficient supply or that the water is drinkable.
(E) Is there any financial assurance of completion of the central
system and any future expansion? If not, include a warning to the
effect that no funds have been set aside in an escrow or trust account
nor have any other financial arrangements been made to assure
completion of the water system.
(F) If the developer or an affiliate or subsidiary of the developer
operates the central system, have all permits been obtained from the
proper agencies for the construction, use and operation of the central
system? If not, include a warning to the effect that the required
permits, approvals or licenses for construction, operation or use of
the water system have not been obtained, therefore there is no
assurance the system can be constructed or used.
(G) If previous completion dates given in prior Statements of
Record have not been met, state that previous completion dates have not
been met and give the previous dates. Underline the answer. If the
central water system is 100 percent completed, no dates are needed.
(H) Is the purchaser to pay any construction costs, one-time
connection fees, availability fees, special assessments or deposits for
the central system? If so, what are the amounts? If not, state that
there are no charges other than use fees. If the purchaser will be
responsible for construction costs of the water mains, state the cost
to install the mains to the most remote lot covered by this report.
(I) If a purchaser wishes to use a lot prior to the date central
water is available to it, may the purchaser install an individual
system? If so, include the information required for individual systems
in Sec. 1010.111(a)(1)(i). Will the purchaser be required to
discontinue use of any individual system and connect to the central
system when service is available to the lot? If the purchaser is not
required to connect to the central system, must any construction costs,
connection fees, availability fees, special assessments or deposits in
connection with the central system still be paid? If an individual
system may not be installed, so state and indicate water will not be
available until the central system is extended to the lot.
(J) If connection to the system is voluntary and not all purchasers
elect to use the system, will the cost to those who do use the system
be increased? If so, include a statement to the effect that connection
to the central system is voluntary and those who use the system may
have to pay a disproportionate share of the cost of the system and its
operation.
(K) If the developer is to construct the system and will later turn
it over to a property owners' association for operation and
maintenance, state the estimated date and conditions of the conveyance
and if it will be conveyed free and clear of any encumbrance. If there
is a charge or if the association must assume an encumbrance, state the
estimated amount of either and the terms for retirement of either
obligation.
(L) If the supplier of water is other than a governmental agency or
an entity which is regulated and supervised by a governmental agency,
state that neither the operation of the water system nor the rates are
regulated by a public authority.
(M) The warning ``We do not own or operate the central water system
so we cannot assure its continued availability for your use'' shall be
included unless:
(1) The central water system is owned and operated by the
developer, or an affiliate or subsidiary of the developer, or
(2) The central water system is owned and operated by a
governmental agency or by an entity which is regulated and supervised
by a governmental agency.
(b) Sewer. (1) What methods of sewage disposal are to be used
(e.g., central system, comfort stations or individual on-site systems
such as septic tanks, holding tanks, etc.) in the subdivision? Of the
following items, only those which apply to the subdivision need be
included.
(i) Individual systems. (A) If individual systems are to be used,
have the local authorities given general approval to the use of these
systems in the subdivision or have they given specific approval for
each lot? Are permits necessary? From whom and where are they obtained?
Must testing of the lot be done prior to the issuance of a permit?
State the cost of a permit and the estimated costs of the system and
any necessary tests.
(B) If holding tanks are to be used, state whether pumping and
hauling
[[Page 79503]]
service is available and the estimated monthly costs of that service
for a family of four living in a house on a year-round basis.
(C) If each and every lot has not been approved for the use of an
individual on-site system, include a warning to the effect that there
is no assurance permits can be obtained for the installation and use of
individual on-site systems. If the sales contract contains no
provisions for refund or exchange in the event a permit cannot be
obtained, include a statement to the effect that there is no assurance
an individual on-site system can be installed and, if it cannot, no
refund of the purchase price of the lot will be made.
(D) If no permit is required for the installation and use of
individual on-site systems, explain whether this may have an effect
upon the purchaser or the availability of construction or permanent
financing.
(E) If the developer has knowledge that permits for the
installation of individual on-site systems have been denied; that there
have been unsatisfactory percolation tests or that systems have not
operated satisfactory in the subdivision, state the number of these
rejections, unsatisfactory tests or operations.
(ii) Comfort stations. (A) If comfort stations are to be used, how
many lots will be served by each station? When will construction be
started? When will the station or stations be completed and ready for
use? Have the necessary permits been obtained for the construction and
use of comfort stations? If the necessary permits have not been
obtained, include a warning that the necessary permits, approvals or
licenses have not been obtained for the construction and use of the
comfort stations; therefore there is no assurance they can be
constructed or used. If there are comfort stations located in different
units and having different completion dates, the chart found in section
XXII of the appendix to this part: Comfort Station Chart shall be used
to show the estimated construction starting date (month and year), the
present percentage of completion and the date on which they will be
used rather than a narrative paragraph.
(B) Who is to construct the comfort stations? Is there any
financial assurance of their completion? If not, include a warning to
the effect that no funds have been set aside in an escrow or trust
account nor have any other financial arrangements been made to assure
completion of the comfort stations and there is no assurance the
facilities will be completed.
(C) Who will be responsible for maintenance of the comfort
stations? Is there any cost to the purchaser for construction, use or
maintenance?
(iii) Central system. (A) If a central sewage treatment and
collection system is being installed, who is responsible for
construction of the system? Will the sewer mains be installed in front
of, or adjacent to, each lot? When will construction be started (month
and year)? When will service be available (month and year)? Who will
own and operate the system? Give the name and address of the entity.
(B) What is the present percentage of completion and the present
capacity of the system (i.e., number of connections which can be
served)? If the present capacity is not sufficient to serve all lots in
the Statement of Record and it is to be expanded in phases, what is the
time-table for expansion and what will trigger that expansion? If the
central system is not complete and there are separate units or sections
of the subdivision which have different service availability dates, the
chart found in section XXIII of the appendix to this part: Sewer Chart
shall be used to show the construction starting date (month and year);
the percentage of completion and service availability date (month and
year) in each unit or section rather than a narrative paragraph. If
sewage treatment facilities are to be supplied by an entity which is
regulated by a governmental agency and which is not the developer or an
affiliate or subsidiary of the developer and the entity has stated it
can serve the anticipated population of the development, then
information on capacity need not appear.
(C) If the developer or an affiliate or subsidiary of the developer
operates the central system, have all necessary permits been obtained
for the construction, operation and use of the central system? Do these
permits limit the number of connections or homes which the system may
serve? If the permits have not been obtained, enter a warning to the
effect that the necessary permits, approvals or licenses have not been
obtained for the central sewage system; therefore there is no assurance
that the system can be completed, operated or used.
(D) If the system cannot now serve all lots included in the
Statement of Record, either because the supplier of the service has not
stated it can and will serve all lots or if construction has not
reached a stage where all lots can be served or permits to serve all
lots have not been obtained, include a warning which states that all
lots cannot now be served; the number which can be served and the
reason for the lack of capacity.
(E) Will the purchaser pay any construction costs, special
assessments, one time connection fees or availability fees? What are
the amounts of these charges? If the purchaser is to pay construction
costs of the sewer mains, state the cost of installation of the mains
to the most remote lot in this Report.
(F) If the purchaser wishes to use the lot prior to the date
central sewer service is available, may the purchaser install an
individual system? If so, include the information on individual systems
required by Sec. 1010.111(b)(1)(i). Will the purchaser be required to
discontinue use of the individual system and connect to the central
system when service is available? If the purchaser is not required to
connect to the central system, must the purchaser still pay any
construction costs, connection fees, availability fees, or special
assessments? If the purchaser may not install an individual system, so
state and indicate service will not be available until the central
system reaches the lot.
(G) If connection to the system is voluntary and not all purchasers
elect to use the system, will the cost to those who do use the system
be increased? If so, include a statement to the effect that connection
to the central system is voluntary and those who use the system may
have to pay a disproportionate share of the cost of the system and its
operation.
(H) Is there any financial assurance of completion of the central
system and any future expansion? If not, include a warning that no
funds have been set aside in an escrow or trust account nor have any
other financial arrangements been made to assure the completion of the
central system; therefore there is no assurance that it will be
completed.
(I) If previous completion dates given in prior Statements of
Record have not been met, state that previous dates have not been met
and give the previous dates. Underline the answer. If the central
sewage treatment and collection system are 100 percent completed, no
dates are needed.
(J) If the developer is to construct the system and will later turn
it over to a property owners' association for operation and
maintenance, state the date of the transfer and whether there will be
any charge for the conveyance and if it will be conveyed free and clear
of any encumbrance. If there is a charge or if the association must
assume an encumbrance, state the estimated amount of either and the
terms for retirement of either obligation.
[[Page 79504]]
(K) If the owner or operator of the central sewer system is other
than a governmental agency or an entity which is regulated and
supervised by a governmental agency, state that neither the operation
of the sewer system nor the rates are regulated by a public authority.
(L) The warning ``We do not own or operate the central sewer system
so we cannot assure its continued availability for your use.'' shall be
included unless:
(1) The central sewer system is owned and operated by the
developer, or an affiliate or subsidiary of the developer, or
(2) The central sewer system is owned and operated by a
governmental agency or by an entity which is regulated and supervised
by a governmental agency.
(c) Electricity. (1) Who will provide electrical services to the
subdivision?
(2) Have primary electrical service lines been extended in front
of, or adjacent to, all of the lots? If not, when (month and year) or
under what conditions will construction begin and when will service be
available? If they have not been installed, who is responsible for
their construction? If electrical service lines have not been extended
in front of, or adjacent to, all lots and there are separate units or
sections having different service availability dates, the chart found
in section XXIV of the appendix to this part: Electric Service Chart
shall be used rather than a narrative paragraph.
(3) If construction of the lines or service to the ultimate
consumer is provided by an entity other than a publicly regulated
utility, who provides, or will provide, the service? Who will be
responsible for maintenance? What is the assurance of completion? If
service is not provided by a publicly regulated utility, what charges
or assessments will the purchaser pay?
(4) If the primary service lines have not been extended in front
of, or adjacent to each lot, will the purchaser be responsible for any
construction costs? If so, what is the utility company's policy and
charges for extension of primary lines? Based on that policy, what
would be the cost to the purchaser for extending primary service to the
most remote lot in this Report?
(5) If electrical service will not be provided, what is an
alternate source (e.g., generators, etc.) and what are the estimated
costs?
(6) If the lines are to be installed by some entity other than a
publicly regulated utility and if there is no financial assurance of
completion, include a warning to the effect that no funds have been set
aside in an escrow or trust account nor have any other financial
arrangements been made to assure construction of the electric lines.
(d) Telephone. (1) Is telephone service now, or will it be,
available? Who will furnish the service?
(2) Have the service lines been extended in front of, or adjacent
to, each of the lots? If not, when, and under what conditions, will
construction be started and when will service be available (month and
year)?
(3) If the service lines have not been extended in front of, or
adjacent to, each lot, will the purchaser be responsible for any
construction costs? If so, what is the utility company's policy and
charges for extension of service lines? Based on that policy, what
would be the cost to the purchaser of extending service lines to the
most remote lot in this Report?
(e) Fuel or other energy source. (1) What fuel, or other energy
source, will be available for heating, cooking, etc. in the
subdivision? If other than electricity is to be used, describe the
availability of the fuel or other energy source. Give the name and
address of the supplier. If the fuel is natural gas, when will the
mains be installed to the lots? What is the cost to the purchaser for
installation fees and connection fees? If oil or propane gas will be
used, include the cost of a storage tank.
(2) [Reserved]
Sec. 1010.112 Financial information.
(a) The information required by paragraphs (b) and (c) of this
section need appear only if the answer to the question is an
affirmative one.
(b) Has the developer had a deficit in retained earnings or
experienced an operating loss during the last fiscal year or, if less
than a year old, since its formation? If so, include a statement to the
effect that this may affect the developer's ability to complete
promised facilities and to discharge financial obligations. This
statement may be omitted if:
(1) All facilities, utilities and amenities proposed to be
completed by the developer in the Property Report and sales contract
have been completed so that the lots included in the Statement of
Record are immediately usable for the purpose for which they are sold,
or if:
(2) The developer is contractually obligated to the purchaser to
complete all facilities, utilities and amenities promised by it in the
Statement of Record, and:
(i) The developer has made financial arrangements, such as the
posting of surety bonds (corporate or individual notes or bonds are not
acceptable), irrevocable letters of credit, escrow or trust accounts,
to assure that the facilities, utilities and amenities will be
completed by the dates set out in the Property Report or contract;
(ii) The sales contract provides for delivery of a deed within 180
days of the signing of the contract which conveys title free of any
mortgage or lien, or the developer has filed an assurance of title
agreement with ILSRP as outlined in Sec. 1010.212(e); and
(iii) Any down payments or deposits are held in an escrow or trust
account.
(c) If the developer's financial statements have been audited, did
the accountant qualify the opinion or decline to give an opinion? If
so, why was the opinion qualified or declined?
(d) The following statement shall appear: ``A copy of our financial
statements for the period ending ---------- is available from us upon
request.''
(e) The information furnished in Sec. 1010.212(b) may necessitate
a warning as to costs and/or feasibility of the completion of the
subdivision.
Sec. 1010.113 Local services.
(a) Fire protection. Describe the availability of fire protection
and indicate whether it is available year round.
(b) Police protection. Describe the availability of police
protection.
(c) Schools. State whether elementary, junior high and senior high
schools are available to residents of the subdivision. Is school bus
transportation available from within the subdivision?
(d) Hospital. Give the name and location of the nearest hospital
and state whether ambulance service is available.
(e) Physicians and dentists. State the location of the nearest
physicians' and dentists' offices.
(f) Shopping facilities. State the location of the nearest shopping
facilities.
(g) Mail service. If there is no mail service to the subdivision,
describe the arrangements the purchasers must make to receive mail
service.
(h) Public transportation. Is there public transportation available
in the subdivision or to nearby towns? If not, give the location of the
nearest public transportation and the distance from the subdivision.
Sec. 1010.114 Recreational facilities.
(a) Recreational facilities to be covered. Unless otherwise
indicated, all information required by paragraphs (b) and (c) of this
section shall be provided for only those recreational facilities which
(1) The developer is contractually responsible to provide or
complete and which are:
[[Page 79505]]
(i) Within, adjacent or contiguous to the subdivision, and
(ii) Maintained substantially for the use of lot owners; or
(2) For which a third party is responsible and which are:
(i) Within, adjacent or contiguous to the subdivision, and
(ii) Maintained substantially for the use of lot owners.
(b) Recreational facility chart. Complete the chart found in
section XXV of the appendix to this part: Recreational Facility Chart
in accordance with the instructions which follow it. This chart shall
immediately follow the Sec. 1010.114 heading. Limit the chart to
facilities provided essentially for use of lot buyers.
(1) Facility. Identify each recreational facility. Identify closely
related facilities (e.g., swimming pool and bathhouse) separately only
if their availability dates differ. If any recreational facility is not
owned by the developer, insert a warning below the chart phrased
substantially as follows: ``We do not own the (name of facility or
facilities) so we can not assure its (their) continued availability.''
(2) Percent complete. State the present percentage of completion of
construction for each recreational facility.
(3) Estimated date of start of construction. Insert the estimated
date of the start of construction for the facility (month and year).
(4) Estimated date available for use. If the construction of the
facility is not complete or if it is not available to lot owners for
its intended use, indicate the estimated date (month and year) that the
facility will be available for use. If the ``estimated date available
for use'' for any facility has been amended to delay it to a later
date, indicate such delay in a statement immediately below the chart.
Underline the response. This statement shall include the name of the
facility and the prior estimated availability date, and it shall be
referenced to the appropriate facility listed on the chart by use of an
asterisk or other appropriate symbol. If a facility is 100 percent
completed and in use, no date is needed.
(5) Financial assurance of completion. If the construction of the
facility is not complete, state whether there is any financial
assurance of completion. If none, state ``none.'' If such exists, state
the type of assurance (i.e., bond, escrow, or trust). If no
documentation for such assurance has been provided in Sec. 1010.214 of
the Statement of Record, then do not indicate such assurance on the
chart, but in place of such assurance on the chart state ``none.''
(6) Buyer's annual cost or assessments. State the lot buyer's
annual cost or assessments for using the facility. These costs should
include any applicable property owners' association assessment, and the
developer's maintenance assessment. If the cost information is lengthy,
you may use an asterisk or other appropriate symbol and include the
cost information in a paragraph below the chart.
(c) Information to be provided below the recreational facility
chart and related warnings.
(1) Constructing the facilities. If the facilities are not
complete, indicate who is responsible for the construction of the
facilities. Indicate whether the purchaser will be required to pay any
of the cost of construction of these facilities (estimate and disclose
such cost, if any).
(2) Maintaining the facilities. Indicate who is responsible for the
operation and maintenance of these facilities.
(3) Facilities which will be leased to lot purchasers. If no
facilities covered here will be leased to a Property Owners'
Association or other lot owners in the subject subdivision, omit this
caption and any information requested under it from the Property
Report. If such leases exist or are anticipated, state which facilities
are or will be leased and indicate the term of the lease. Also, state
whether the lot owners will have an opportunity to terminate or ratify
the lease after control of the Property Owners' Association is turned
over to them. Indicate whether the owner of a recreational facility
leased to the Property Owners' Association or other lot owners may
encumber it and whether the holders of such encumbrances may acquire
the leased facilities and not honor the lease. Indicate whether the
lease payments may be increased on an escalating or other basis and
what costs or expenses, if any, will be borne by the owner. State
whether the lease can be assigned or sublet. State how the lease can be
terminated.
(4) Transfer of the facilities. If there are presently any liens or
mortgages on any of these recreational facilities, describe such liens
or mortgages. If the developer, or owner of the subdivision, their
principals, or subsidiaries, intend to transfer the title of a listed
recreational facility in the future, explain at what time, by what type
of conveyance, and to whom such transfer will be made. Disclose any
adverse effects on, or cost to, lot purchasers which may be caused by
such transfer. If any facility is to be transferred to lot owners as a
Property Owners' Association or otherwise, state whether the facility
will be transferred free and clear of all liens and encumbrances. If
not, state the amount of the encumbrance to be assumed and disclose any
contractual conditions on such transfer which relate to lot purchasers.
(5) Permits. If the necessary permits have not been obtained for
the construction and/or use of the facilities, identify the facilities
for which such permits have not been obtained and include the following
statement, or one substantially the same, in the narrative under the
caption ``Permits'': ``The (identify the permit or license) has not
been obtained and therefore there is no assurance that the lot owners
will be able to use the (identify the facility).''
(6) Who may use the facilities. Indicate who will be permitted to
use the recreational facilities (e.g., lot owners, their guests,
employees of developer, general public). If the general public will be
permitted to use the facilities include the following statement in the
narrative under the caption ``Who may use the facilities'': ``The
(identify the facility) is open to use by the general public and their
use of the facility may limit use of it by lot owners.''
Sec. 1010.115 Subdivision characteristics and climate.
(a) General topography. What is the general topography and the
major physical characteristics of the land in the subdivision? State
the percentage of the subdivision which is to remain as natural open
space and as developed parkland. Are there any steep slopes, rock
outcroppings, unstable or expansive soil conditions, etc., which will
necessitate the use of special construction techniques to build on, or
use, any lot in the subdivision? If so, identify the lots affected, and
describe the techniques recommended. If any lots in the subdivision
have a slope of 20%, or more, include a warning that ``Some lots in
this subdivision have a slope of 20%, or more. This may affect the type
and cost of construction.''
(b) Water coverage. Are any lots, or portions of any lots, covered
by water at any time? What lots are affected? When are they covered by
water? How does this affect their use for the purpose for which they
are sold? Can the condition be corrected? At what cost to the
purchaser?
(c) Drainage and fill. Identify the lots which require draining or
fill prior to being used for the purpose for which they are being sold.
Who will be responsible for any corrective action? If the purchaser is
responsible, what are the estimated costs?
[[Page 79506]]
(d) Flood plain. Is the subdivision located within a flood plain or
an area designated by any Federal, state or local agency as being flood
prone? What lots are affected? Is flood insurance available? Is it
required in connection with the financing of any improvements to the
lot? What is the estimated cost of the flood insurance?
(e) Flooding and soil erosion. (1) Does the developer have a
program which provides, or will provide, at least minimum controls for
soil erosion, sedimentation or periodic flooding throughout the
subdivision?
(2) If there is a program, describe it. Include in the description
information as to whether the program has been approved by the
appropriate government officials; when it is to start; when it is to be
completed (month and year); whether the developer is obligated to
comply with the program and whether there is any financial assurance of
completion.
(3) If there is no program or if the program has not been approved
by the appropriate officials or if the program does not provide minimum
protection, include a statement to the effect that the measures being
taken may not be sufficient to prevent property damage or health and
safety hazards. A minimum program will usually provide for:
(i) Temporary measures such as mulching and seeding of exposed
areas and silt basins to trap sediments in runoff water, and
(ii) Permanent measures such as sodding and seeding in areas of
heavy grading or cut and fill along with the construction of diversion
channels, ditches, outlet channels, waterway stabilizers and sediment
control basins.
(f) Nuisances. Are there any land uses which may adversely affect
the subdivision (e.g., unusual or unpleasant noises or odors,
pollutants or nuisances such as existing or proposed industrial
activity, military installations, airports, railroads, truck terminals,
race tracks, animal pens, noxious smoke, chemical fumes, stagnant
ponds, marshes, slaughterhouses and sewage treatment facilities)? If
any nuisances exist, describe them. If there are none, state there are
no nuisances which affect the subdivision.
(g) Hazards. (1) Are there any unusual safety factors which affect
the subdivision (e.g., dilapidated buildings, abandoned mines or wells,
air or vehicular traffic hazards, danger from fire or explosion or
radiation hazards)? Is the developer aware of any proposed plans for
construction which may create a nuisance or safety hazard or adversely
affect the subdivision? If there are any existing hazards or if there
is any proposed construction which will create a nuisance or hazard,
describe the hazard or nuisance. If there are no existing or possible
future hazards, state that there are none.
(2) Is the area subject to natural hazards or has it been formally
identified by any Federal, state or local agency as an area subject to
the frequent occurrence of natural hazards (e.g., tornadoes,
hurricanes, earthquakes, mudslides, forest fires, brush fires,
avalanches, flash flooding)? If the jurisdiction in which the
subdivision is located has a rating system for fire hazard, state the
rating assigned to the land in the subdivision and explain its meaning.
(h) Climate. What are the average temperature ranges, summer and
winter, for the area in which the subdivision is located (i.e., high,
low and mean)? What is the average annual rainfall and snowfall?
(i) Occupancy. How many homes are occupied on a full- or part-time
basis as of (date of submission)?
Sec. 1010.116 Additional information.
(a) Property Owners' Association. (1) Will there be a property
owners' association for the subdivision? Has it been formed? What is
its name? Is it operating? If not yet formed, when will it be formed?
Who is responsible for its formation?
(2) Does the developer exercise, or have the right to exercise, any
control over the Association because of voting rights or placement of
officers or directors? For how long will this control last?
(3) Is membership in the association voluntary? Will non-member lot
owners be subject to the payment of dues or assessments? What are the
association dues? Can they be increased? Are members subject to special
assessments? For what purpose? If membership in the association is
voluntary and if the association is responsible for operating or
maintaining facilities which serve all lot owners, include the
following statement: ``Since membership in the association is
voluntary, you may be required to pay a disproportionate share of the
association costs or it may not be able to carry out its
responsibilities.''
(4) What are the functions and responsibilities of the association?
Will the association hold architectural control over the subdivision?
(5) Are there any functions or services that the developer now
provides at no charge for which the association may be required to
assume responsibility in the future? If so, will an increase in
assessments or fees be necessary to continue these functions or
services?
(6) Does the current level of assessments, fees, charges or other
income provide the capability for the association to meet its present,
or planned, financial obligations including operating costs,
maintenance and repair costs and reserves for replacement? If not, how
will any deficit be made up?
(b) Taxes. (1) When will the purchaser's obligation to pay taxes
begin? To whom are the taxes paid? What are the annual taxes on an
unimproved lot after the sale to a purchaser? If the taxes are to paid
to the developer, include a statement that ``Should we not forward the
tax funds to the proper authorities, a tax lien may be placed against
your lot.''
(2) If the subdivision is encompassed within a special improvement
district or if a special district is proposed, describe the purpose of
the district and state the amount of assessments. Describe the
purchaser's obligation to retire the debt.
(c) Violations and litigations. This information need appear only
if any of the questions are answered in the affirmative. Unless the
Director gives prior approval for it to be omitted, a brief description
of the action and its present status or disposition shall be given.
(1) With respect to activities relating to or in violation of a
Federal, state or local law concerned with the environment, land sales,
securities sales, construction or sale of homes or home improvements,
consumer fraud or similar activity, has the developer, the owner of the
land or any of their principals, officers, directors, parent
corporation, subsidiaries or an entity in which any of them hold a 10%
or more financial interest, been:
(i) Disciplined, debarred or suspended by any governmental agency,
or is there now pending against them an action which could result in
their being disciplined, debarred or suspended or,
(ii) Convicted by any court, or is there now pending against them
any criminal proceedings in any court? ILSRP suspension notices on pre-
effective Statements of Record and amendments need not be listed.
(2) Has the developer, the owner of the land, any principal, any
person holding a 10% or more financial or ownership interest in either,
or any officer or director of either, filed a petition in bankruptcy?
Has an involuntary petition in bankruptcy been filed against it or them
or have they been an officer or director of a company which became
insolvent or was involved, as a debtor, in any proceedings under the
Bankruptcy Act during the last 13 years?
[[Page 79507]]
(3) Is the developer or any of its principals, any parent
corporation or subsidiary, any officer or director a party to any
litigation which may have a material adverse impact upon its financial
condition or its ability to transfer title to a purchaser or to
complete promised facilities? If so, include a warning which describes
the possible effects which the action may have upon the subdivision.
(d) Resale or exchange program. (1) Are there restrictions which
might hinder lot owners in the resale of their lots (e.g., a
prohibition against posting signs, limitations on access to the
subdivision by outside brokers or prospective buyers; the developer's
right of first refusal; membership requirements)? If so, briefly
explain the restrictions.
(2) Does the developer have an active resale program? If the answer
is ``no,'' include the following statement: ``We have no program to
assist you in the sale of your lot.''
(3) Does the developer have a lot exchange program? If the answer
is ``yes,'' describe the program; state any conditions and indicate if
the program reserves a sufficient number of lots to accommodate all
those wishing to participate. If there is no program or if sufficient
lots are not reserved, include one of the following statements as
applicable: ``We do not have any provision to allow you to exchange one
lot for another'' or ``We do not have a program which assures that you
will be able to exchange your lot for another.''
(e) Unusual situations. This topic need appear only if one or more
of the following cases apply to the subdivision, then only the
applicable subject, or subjects, will appear.
(1) Leases. What is the term of the lease? Is it renewable? Is it
recordable? Can creditors of the developer, or owner, acquire title to
the property without any obligation to honor the terms of the lease?
Are the lease payments a flat sum or are they graduated? Can the lessee
mortgage or otherwise encumber the leasehold? Will the lessee be
permitted to remove any improvements which have been installed when the
lease expires or is terminated?
(2) Foreign subdivision. (i) Is the owner or developer of the
subdivision a foreign country corporation? If legal action is necessary
to enforce the contract, must it be taken in the courts of the country
where the subdivision is located?
(ii) Does the country in which the subdivision is located have any
laws which restrict, in any way, the ownership of land by aliens? If
so, what are the restrictions?
(iii) Must an alien obtain a permit or license to own land, build a
home, live, work or do business in the country where the subdivision is
located? If so, where is such permit or license secured; for how long
is it valid and what is its cost?
(3) Time sharing. (i) How is title to be conveyed? How many shares
will be sold in each lot? How is use time allocated? How are taxes,
maintenance and utility expenses divided and billed? How are voting
rights in any Association apportioned? Are there management fees? If
so, what are their amounts and how are they apportioned?
(ii) Is conveyance of any portion of the lot contingent upon the
sale of the remaining portions? Is the initial buyer responsible for
any greater portion of the expense than his normal share until the
remaining interests are sold? If the purchase of any of the portions is
financed, will the default of one owner have any effect upon the
remaining owners?
(4) Memberships. (i) Does the purchaser receive any interest in
title to the land? What is the term of the membership? Is it renewable?
What disposition is made of the membership in the event of the death of
the member? Are the lots individually surveyed and the corners marked?
If not, how does the member identify the area which the member is
entitled to use? What is the approximate square footage the member is
entitled to use? Are there different classes of membership? How are the
different classes identified and what are the differences between them?
(ii) If the member does not receive any interest in the title to
the land, include a warning to the effect that ``you receive no
interest in the title to the land but only the right to use it for a
certain period of time.''
(f) Equal opportunity in lot sales. State whether or not the
developer is in compliance with title VIII of the Civil Rights Act of
1968 by not directly or indirectly discriminating on the basis of race,
color, religion, sex, national origin, familial status, and handicap in
any of the following general areas: Lot marketing and advertising,
rendering of lot services, and in requiring terms and conditions on lot
sales and leases. An affirmative answer cannot be given if the
developer, directly or indirectly, because of race, color, religion,
sex, national origin, familial status, or handicap is:
(1) Refusing to sell or lease lots after the making of a bona fide
offer or to negotiate for the sale or lease of lots or is otherwise
making unavailable or denying a lot to any person, or
(2) Discriminating against any person in the terms, conditions or
privileges in the sale or leasing of lots or in providing services or
facilities in connection therewith, or
(3) Making, printing, publishing or causing to be made, printed or
published any notice, statement or advertisement with respect to the
sale or leasing of lots that indicates any preference, limitation or
discrimination against any person, or
(4) Representing to any person that any lot is not available for
inspection, sale or lease when such lot is in fact available, or
(5) For profit, inducing or attempting to induce any person to sell
or lease any lot by representations regarding the entry or non-entry
into the neighborhood of a person or persons of a particular race,
color, religion, sex, national origin, familial status, or handicap.
(g) Listing of lots. Provide a listing of lots which shall consist
of a description of the lots included in the Statement of Record by the
names or number of the section or unit, if any; the block number, if
any; and the lot numbers. The lots shall be listed in the most
efficient and concise manner. If the filing is a consolidation, the
listing shall include all lots registered to date in the subdivision,
except any which have been deleted by amendment.
Sec. 1010.117 Cost sheet, signature of Senior Executive Officer.
(a) Cost sheet--Format. (1) The cost sheet shall be prepared in
accordance with the format found in section XXVI of the appendix to
this part: Cost Sheet Format and paragraph (a)(2) of this section.
(2) Cost sheet instructions. (i) All amounts for cost sheet items
will be entered before the purchaser signs the receipt. However, any
costs that are identical for all lots may be pre-printed.
(ii) If a central water or sewer system will be used in all or part
of the subdivision and a private system in all or other parts, then the
portion that does not apply to the purchaser's lot shall be crossed
out.
(iii) If individual private systems may be used prior to the
availability of service from any central system and the purchaser is
not required to connect to any central system, both figures may be
entered or only the highest cost figures may be used with a
parenthetical explanation or footnote. If the purchaser is required to
connect to any central system and discontinue the use of his private
system when central service is
[[Page 79508]]
available, both cost figures shall be given, together with an
explanation or footnote.
(iv) If there is a one time, lump sum ``availability fee'' which is
assessed to the purchaser in connection with a central utility, include
under ``other'' and identify.
(v) Dues and assessments need be included only if they are
involuntary regardless of use.
(vi) At the discretion of the Director, where there is extreme
diversity in the figures for different areas of the subdivision,
variations may be permitted as to whether the figures will be printed,
entered manually, or a range of costs used or any combination of these
features.
(vii) The estimated annual taxes shall be based upon the projected
valuation of the lot after sale to a purchaser.
(b) Signature of the Senior Executive Officer. The Senior Executive
Officer or a duly authorized agent shall sign the property report.
Facsimile signatures may be used for purposes of reproduction of the
property report.
Sec. 1010.118 Receipt, agent certification, and cancellation page.
(a) Format. The receipt, agent certification and cancellation page
shall be prepared in accordance with the sample found in section XXVII
of the appendix to this part: Sample Receipt, Agent Certification and
Cancellation Page.
(b) The original and one copy of this executed page shall be
attached to the Property Report delivered to prospective purchasers.
After the purchaser has signed the receipt and the salesman has signed
the certification, the copies can be retained by the developer for a
period of three years from the date of execution or the term of the
contract, whichever is the longer. Upon demand by the Director, the
developer shall, without delay, make the copies of these receipts and
certifications available for inspection by the Director or the
developer shall forward to the Director any of the receipts and
certifications, or copies thereof, as the Director may specify.
(c) If the transaction takes place through the mails, the cost
figures shall be entered and the person most active in dealing with the
prospective purchaser shall sign the certification prior to mailing the
Property Report to the purchaser. Otherwise, the certification shall be
executed in the presence of the purchaser.
(d) The date of Report appearing on the receipt shall be the same
as that appearing on the cover sheet of the Property Report.
(e) Notification of cancellation by mail shall be considered given
at the time post-marked.
Sec. 1010.200 Instructions for Statement of Record, Additional
Information and Documentation.
The Additional Information and Documentation portion of the
Statement of Record shall contain the statements and documents required
in Sec. Sec. 1010.208 through 1010.219. Each section number and its
associated heading and each paragraph letter or number and their
associated subheadings or captions must appear in this portion.
Following each heading, subheading, or caption printed in this portion,
the registrant shall insert an appropriate response. If a heading,
subheading, or caption does not apply to the subdivision, it shall be
followed by the words ``not applicable''. Immediately after the page(s)
on which the section number and answers for that section appear, insert
the information or documents which support that section. In addition to
the statements and documentation expressly required there shall be
added any further material, information, documentation and
certifications as may be necessary in the public interest and for the
protection of purchasers or to cause the statements made to be not
misleading in the light of the circumstances under which they are made.
Sec. Sec. 1010.201-1010.207 [Reserved]
Sec. 1010.208 General information.
(a) Administrative information. (1) State whether the material
represents an initial Statement of Record or a consolidated Statement
of Record. If it is a consolidated Statement of Record, identify the
original ILSRP number assigned to the initial Statement of Record.
State whether subsequent Statements of Record will be submitted for
additional lots in the subdivision.
(2) Has the developer submitted a request for an exemption for the
subdivision?
(3) List the states in which registration has been made by the
developer for the sale of lots in the subdivision.
(4) If any state listed in paragraph (a)(3) of this section has not
permitted a registration to become effective or has suspended the
registration or prohibited sales, name the state involved and give the
reasons cited by the state for their action.
(5) State whether the developer has made, or intends to make, a
filing with the U.S. Securities and Exchange Commission (SEC) which is
related in any way to the subdivision. If a filing has been made with
the SEC, give the SEC identification number; identify the prospectus by
name; date of filing and state the page number of the prospectus upon
which specific reference to the subdivision is made. Any disciplinary
action taken against the developer by the SEC should be disclosed in
Sec. Sec. 1010.116 and 1010.216.
(b) Subdivision information. (1) If this is a consolidated
Statement of Record, state the number of lots being added, the number
of lots in prior Statements of Record and the new total number of lots.
The Director must be able to reconcile the numbers stated here with the
title evidence; the plat maps and the disclosure in Sec. 1010.108.
(2) State the number of acres represented by the lots in this
Statement of Record. If this is a consolidated Statement of Record,
state the number of acres being added, the number of acres in prior
Statements of Record and the new total number of acres. State the total
acreage owned in the subdivision, the number of acres under option or
similar arrangement for acquisition of title to the land and the total
acreage to be offered pursuant to the same common promotional plan.
(3) State whether any lots have been sold in this subdivision since
April 28, 1969, and prior to registration with ILSRP. If they were sold
pursuant to an exemption, identify the exemption provision and state
whether an advisory opinion, exemption order or exemption determination
was obtained with respect to those lots sales. Give the ILSRP number
assigned to the exemption, if any.
(c) Developer information. (1) State the name, address, Internal
Revenue Service number and telephone number of the owner of the land.
If the owner is other than an individual, name the type of legal entity
and list the interest, and extent thereof, of each principal. Identify
the officers and directors.
(2) If the developer is not the owner of the land, state the
developer's name, address, Internal Revenue Service number and
telephone number. If the developer is other than an individual, name
the type of legal entity and list the interest, and the extent thereof,
of each principal. Identify the officers and directors.
(3) If you wish to appoint an authorized agent, state the agent's
name, address and telephone number and scope of responsibility. This
shall be the party designated by the developer to receive
correspondence, service of process and notice of any action taken by
ILSRP. In all Statements of Record, including those for foreign
subdivisions, the authorized agent shall be a resident of the United
States. A change of the
[[Page 79509]]
authorized agent will require an appropriate amendment.
(4) State whether the owner of the land, the developer, its parent,
subsidiaries or any of the principals, officers or directors of any of
them are directly or indirectly involved in any other subdivision
containing 100 or more lots. If so, identify the subdivision by name,
location, and ILSRP number, if any.
(5) State whether the owner or developer is a subsidiary
corporation. If either the owner or developer is a subsidiary
corporation or if any of the principals of the owner or developer are
corporate entities, name the parent and/or corporate entity and state
the principals of each to the ultimate parent entity.
(d) Documentation . (1) Submit a copy of the property report,
subdivision report, offering statement or similar document filed with
the state or states with which the subdivision has been registered.
(2) Submit a copy of a general plan of the subdivision. This
general plan must consist of a map, prepared to scale, and it must
identify the various proposed sections or blocks within the
subdivision, the existing or proposed roads or streets, and the
location of the existing or proposed recreational and/or common
facilities. In an initial filing, this map must at least show the area
included in the Statement of Record. In a consolidated Statement of
Record, show areas being added, as well as the areas previously
registered. If a map of the entire subdivision is submitted with the
initial Statement of Record, and if no substantial changes are made
when material for a consolidated Statement of Record is submitted, the
original map may be included by reference.
(3)(i) If the developer is a corporation, submit a copy of the
articles of incorporation, with all amendments; a copy of the
certificate of incorporation or a certificate of a corporation in good
standing and, if the subdivision is located in a state other than the
one in which the original certificate of corporation was issued, a
certificate of registration as a foreign corporation with the state
where the subdivision is located.
(ii) If the developer is a partnership, unincorporated association,
joint stock company, joint venture or other form of organization,
submit a copy of the articles of partnership or association and all
other documents relating to its organization.
(iii) If the developer is not the owner of the land, submit copies
of the above documents for the owner.
Sec. 1010.209 Title and land use.
(a) General information. (1) State whether the developer has
reserved the right to exchange or withdraw lots after a purchaser has
signed a sales contract (e.g., for prior sales, failure to pass credit
check). If yes, indicate this authority and make reference to the
applicable paragraph in the sales contract or other document.
(2) State whether there is a provision giving purchasers an option
to exchange lots. If yes, indicate this and make reference to the
applicable paragraph in the sales contract or other document.
(3) State whether the developer knows of any instruments not of
record which, if recorded, would affect title to the subdivision. If
yes, copies of these instruments shall be submitted, except that copies
of unrecorded contracts for sales of lots in the subdivision need not
be submitted.
(4)(i) Identify the Federal, State, and local agencies or similar
organizations which have the authority to regulate or issue permits,
approvals or licenses which may have a material effect on the
developer's plans with respect to the proposed division of the land,
and any existing or proposed facilities, common areas or improvements
to the subdivision.
(ii) Describe or identify the land or facilities affected; the
permit, approval or license required; and indicate whether the permit,
approval or license has been obtained by the developer.
(iii) If no agency regulates the division of the land or issues any
permits, approvals or licenses with respect to improvements, so state.
(iv) Answers must specifically cover the areas of environmental
protection; environmental impact statements; and construction,
dredging, bulkheading, etc. that affect bodies of water within or
around the subdivision. Also include licenses or permits required by
water resources boards, pollution control boards, river basin
commissions, conservation agencies or similar organizations.
(5) State whether it is unlawful to sell lots prior to the final
approval and recording of a plat map in the jurisdiction where the
subdivision is located.
(b) Title evidence. (1) Submit title evidence that specifically
states the status of the legal and equitable title to the land
comprising the lots covered by the Statement of Record and any common
areas or facilities disclosed in the Property Report. Title evidence
need not be submitted for those common areas and facilities which are
not owned by the developer.
(2) Acceptable title evidence shall be dated no earlier than 20
business days preceding the date of the filing of the Statement of
Record with the Director. Previously issued title evidence may be
updated to the date referred to in the preceding sentence by
endorsements or attorneys' opinions of title.
(3) The developer shall amend the title evidence to reflect the
change in status of title of any previously registered, reacquired lots
unless their status is at least as marketable as they were when first
offered for sale by the developer as registered lots.
(c) Forms of acceptable title evidence. (1) An original or a copy
of a signed owner's or mortgagee's policy of title insurance, title
commitment, certificate of title or similar instrument issued by a
title company authorized by law to issue such instruments in the state
in which the subdivision is located. Title evidence that limits
insurance or negligence liability to amounts less than the market value
of the subject land at the time of its acquisition by the subdivision
owner is not acceptable;
(2) A legal opinion stating the condition of title, prepared and
signed by an attorney at law experienced in the examination of titles
and a member of the Bar in the state in which the property is located.
The title opinion may be based on a Torrens land registration system
certificate of title, or similar instrument, provided it meets all
general title evidence requirements of this section and a copy of the
registration certificate of title is submitted. Title opinions that
limit negligence liability to amounts less than the market value of the
subject land at the time of its acquisition by the subdivision owner
are not acceptable.
(d) Title searches. The required evidence of the status of title
shall be based on a search of all public records which may contain
documents affecting title to the land or the developer's ability to
deliver marketable title. The search must cover a period which is
required or generally considered adequate for insuring marketability of
title in the jurisdiction in which the subdivision is located. Such
search shall include an examination of at least the documents listed in
paragraphs (d)(1) through (5) of this section. This search may be
accomplished through the use of a title insurance company title plant,
the information in which is based on current searches of the
appropriate and necessary documents, including as a minimum those
listed immediately above. For any attorney's title opinion based on
Torrens certificates of title, the title search need only go beyond the
original time of registration of the
[[Page 79510]]
certificate of title for those types of encumbrances which were not
conclusively settled by the proceedings at the time of such
registration. In such cases, the required statement shall clearly
reflect the documents and periods searched.
(1) The records of the recorder of deeds or similar authority;
(2) U.S. Internal Revenue Liens;
(3) The records of the circuit, probate, or other courts including
Federal courts and bankruptcy or reorganization proceedings which have
jurisdiction to affect the title to the land;
(4) The tax records;
(5) Financing statements filed pursuant to the Uniform Commercial
Code or similar law. If it is held that the financing statements do not
affect the title of the land, include a statement of the legal
authority for that opinion.
(e) Items to be included in the title evidence. The acceptable
title evidence must include the following information, instruments and
statements and need not be repeated or duplicated elsewhere in the
Statement of Record.
(1) A legal description of the land on which the lots, common
areas, and facilities covered by the title evidence are located. This
legal description shall be adequate for conveying land in the
jurisdiction in which the subdivision is located. If this legal
description is based on a recorded plat, the lot numbers, recording
place, book name, book number, and page number shall be stated in the
description. If this legal description is given by metes and bounds,
the title evidence shall include or be accompanied by a certified
statement of the preparer of the title evidence, a licensed attorney,
or an engineer or surveyor, indicating that all subject lots, common
areas, and common facilities are encompassed within the metes and
bounds description in the evidence. If at any time after the submission
of the legal description required above, the description of the subject
land is changed or found to be in error, a correcting amendment shall
be made to the Statement of Record.
(2) The name of the person(s) or other legal entity(ies) holding
fee title to the property described.
(3) The name of any person(s) or other legal entity(ies) holding a
leasehold estate or other interest of record in the property described.
(4) A listing of any and all exceptions or objections to the title,
estate or interest of the person(s) or legal entity(ies) referred to in
paragraph (e)(2) or (3) of this section, including any encumbrances,
easements, covenants, conditions, reservations, limitations or
restrictions of record. Any reference to exceptions or objections to
title shall include specific references to the instruments in the
public records upon which they are based. When an objection or
exception to title affects less than all of the property covered by
this Statement of Record, the title evidence shall specifically note
what portion of the property is so affected.
(5) Copies of all instruments in the public records specifically
referred to in paragraph (e)(4) of this section. Abstracts of such
instruments are acceptable if prepared by an attorney or professional
or official abstractor qualified and authorized by law to prepare and
certify such abstracts and if the abstracts contain a material portion
of the recorded instruments sufficient to determine the nature and
effect of such instruments. Also include copies of any release
provisions, relating to encumbrances on the property described, which
are not included in the documents otherwise required by this section.
(6) If an attorney's title opinion has been submitted pursuant to
this section which has been based on a Torrens land registration
certificate of title, submit a copy of such certificate.
(f) Supplemental title information. (1) If there is a holder of an
ownership interest in the land other than the developer, submit a copy
of any documentation which evidences the developers' authorization to
develop and/or sell the land.
(2) Submit copies of any trust deeds, deeds in trust, escrow
agreements or other instruments which purport to protect the purchaser
in the event of default or bankruptcy by the developer on any
instrument or instruments which create a blanket encumbrance upon the
property unless they have been previously provided as part of ``title
evidence'' submitted pursuant to paragraph (e) of this section.
(3)(i) Submit copies of all forms of contracts or agreements and
notes to be used in selling or leasing lots. The contracts or
agreements, including promissory notes, must contain the following
language in boldface type (which must be distinguished from the type
used for the rest of the contract) on the face or signature page above
all signatures: ``You have the option to cancel your contract or
agreement of sale by notice to the seller until midnight of the seventh
day following the signing of the contract or agreement. If you did not
receive a Property Report prepared pursuant to the rules and
regulations of the Bureau of Consumer Financial Protection, in advance
of your signing the contract or agreement, the contract or agreement of
sale may be cancelled at your option for two years from the date of
signing.''
(ii) If the purchaser is entitled to a longer revocation period by
operation of state law or the Act, that period becomes the Federal
revocation period and the contract or agreement must reflect the
requirements of the longer period, rather than the seven days. This
language shall be consistent with that shown on the cover page (see
Sec. 1010.105).
(iii) The revocation provisions may not be limited or qualified in
the contract or other document by requiring a specific type of notice
or by requiring that notice be given at a specified place.
(iv) If it is represented that the developer will provide or
complete roads or facilities for waters, sewer, gas, electric service
or recreational amenities, the contract must contain a provision that
the developer is obligated to provide or complete such roads,
facilities and amenities (see Sec. 1011.15(f)).
(4) Submit copies of deeds and leases by which the developer will
lease or convey title to the lots to purchasers or lessees.
(g) Plat maps, environmental studies and restrictions. (1) Plat
maps. (i) In those jurisdictions where it is unlawful to sell lots
prior to final approval and recording of the plat, and in those cases
where a plat has been recorded, submit a copy of the recorded plat.
This plat should be an exact copy of the recorded document. It should
reflect the signatures of the approving authorities and bear a stamp or
notation by the recorder of deeds, or similarly constituted officer, as
to the recording data.
(ii) If the plat has not been approved by the local authorities nor
recorded, and if it is not unlawful to sell lots prior to final
approval and recording, submit a map which has been prepared to scale
and which shows the proposed division of the land, the lot dimensions
and their relation to proposed or existing streets and roads. The map
shall contain sufficient engineering data to enable a surveyor to
locate the lots.
(iii) Whether recorded or unrecorded, the plat or map should show:
(A) The dimensions of each lot, stated in the standard unit of
measure acceptable for such purposes in the political subdivision where
the land is located.
(B) A clear delineation of each of the lots and any common areas or
facilities.
(C) Any encroachments or rights-of-way on, over, or under the land,
or a notation of these items together with the identity of the lots
affected.
[[Page 79511]]
(D) The courses, distances and monuments, natural or otherwise, of
the land's boundaries; contiguous boundaries and identification or
ownership of adjoining land and names of abutting streets, ways, etc.
(E) The location of the section or unit encompassing the lots in
relationship to the larger tract, or tracts, in the subdivision.
(F) The delineation of any flood plains or flood control easements
affecting any of the lots.
(iv) The plat, or map shall be prepared by a licensed surveyor or
engineer.
(v) If all lots on each page of the plat are not included in the
Statement of Record with which the plat or map is submitted, then the
lots which are to be included in the Statement of Record shall be
identified on the plat or map; a legend describing the method of
identification shall be entered on the face of the plat or map and the
number of lots so identified entered in the lower right hand corner of
the plat map. The Director must be able to reconcile the totals of
these numbers with the information given in Sec. Sec. 1010.108 and
1010.208 of the Statement of Record and the title evidence.
(2) Environmental impact study. If the developer is aware of any
environmental impact study which considers the effect of the
subdivision on the environment, submit a summary of that study.
(3) Restrictions or covenants. Submit a copy of any recorded or
proposed restrictions or covenants for the subdivision if not submitted
elsewhere in this Statement of Record. A copy of these restrictions or
covenants shall be delivered to a prospective purchaser upon request. A
supply shall be maintained at whatever place or places as will be
necessary to allow immediate delivery upon request.
Sec. 1010.210 Roads.
(a) State the estimated cost to the developer of the proposed road
system.
(b) If the developer is to complete any roads providing access to
the subdivision, submit copies of any bonds or escrow agreements which
have been posted to guarantee completion thereof.
(c) Submit copies of any bonds or escrow agreements which have been
posted to assure completion of the roads within the subdivision.
(d) If the interior roads are to be maintained by a public
authority, submit a copy of a letter from that authority which states
that the roads have been, or the conditions upon which they will be,
accepted for maintenance and when.
Sec. 1010.211 Utilities.
(a) Water. (1) State the estimated cost to the developer of the
central water system.
(2) If water is to be supplied by a central system, furnish a
letter from the supplier that it will supply the water. If the system
is operated by a governmental division or by an entity whose operations
are regulated by a governmental agency but which is not affiliated with
or under the control of the developer, the letter shall include a
statement that the supply of water will be sufficient to serve the
anticipated population of the subdivision or how many homes or
connections it can and will serve and that the water is tested at
regular intervals and has been found to meet all standards for a public
water supply.
(3) If the water is to be supplied by individual wells, by an
entity which is not regulated by a governmental agency, by the
developer or by an entity which is affiliated with or controlled by the
developer, submit a copy of any engineers' reports or hydrological
surveys which indicate there is a sufficient supply of water to serve
the anticipated population of the subdivision.
(4) If the supplier of water is not in one of the categories in
paragraph (a)(2) of this section, submit a copy of a letter or report
from a cognizant health officer, or from a private laboratory licensed
by the state to perform tests and issue reports on water, to the effect
that the water was found to meet all drinking water standards required
by the state for a public water system.
(5) If any bond, escrow agreement or other financial assurance of
the completion of the central system, including any phases which are to
be constructed in the future, has been posted by the developer or an
entity not regulated by a government agency, furnish a copy of the
document.
(6) Furnish a copy of any permits which have been obtained by the
developer or any entity affiliated with or under the control of the
developer in connection with the construction and operation of the
central system. If a permit is required to install individual wells,
submit a letter from the proper authority which states the requirements
for obtaining the permit and that there is no objection to the use of
individual wells in the subdivision.
(7) Furnish a copy of any membership agreement or contract which
allows or requires lot owners to use the central water system. If this
document is furnished elsewhere in the Statement of Record, reference
to it may be made here.
(b) Sewer. (1) State the estimated cost to the developer of the
central sewer system.
(2) If sewage disposal is to be by individual on-site systems,
furnish a letter from the local health authorities giving general
approval to the use of these systems in the subdivision or giving
specific approval for each and every lot.
(3) If sewage disposal is to be through a central system which is
owned and operated by a governmental division, or by an entity whose
operations are regulated by a governmental agency but which is not
affiliated with, or under the control of, the developer, furnish a
letter from the entity that it will provide this service and that its
treatment facilities have the capacity to serve the anticipated
population of the subdivision or how many homes or connections it can
and will serve.
(4) Furnish a copy of any permits obtained by the developer or any
entity affiliated with or under the control of the developer, for the
construction and operation of the central sewer system or construction
and use of any other method of sewage disposal contemplated for the
subdivision except those to be obtained by individual lot owners at a
later date.
(5) If any bond, escrow agreement or other financial assurance of
the completion of the central system or other system for which the
developer is responsible, and any future expansion, has been posted,
furnish a copy of the document.
(6) Furnish a copy of any membership agreement of contract which
allows, or requires, the lot owners to use the central system. If this
document is furnished elsewhere in the Statement of Record, it may be
included here by reference.
(c) Electricity. Give an estimate of the total construction cost to
be expended by the developer and submit any instrument providing
financial assurance of completion of the facilities which has been
posted by the developer.
(d) Telephone. Give an estimate of the total construction cost to
be expended by the developer and submit a copy of any instrument
providing financial assurance of the completion of the facilities which
has been posted by the developer.
Sec. 1010.212 Financial information.
(a) Financing of improvements. Describe the financing plan that is
to be used in financing on-site or off-site improvements proposed in
the Statement of Record.
[[Page 79512]]
(b) Complete the following format (If the subdivision or common
promotional plan contains, or will contain, 1000 or more lots, furnish
this information in its entirety. If the subdivision or common
promotional plan contains, or will contain, less than 1,000 lots, only
paragraphs (b)(3)(iii) and (iv) of this section need be completed.)
(1) Estimated date for full completion of amenities
(2) Projected date for complete sell out of subdivision
(3) Cost and expense recap for lots included in this Statement of
Record:
(i) Land acquisition cost or current fair market value of land.
(ii) Development and improvement costs (include the estimated cost
of such items as roads, utilities, and amenities which the developer
will incur).
(iii) Estimated marketing and advertising costs.
(iv) Estimated sales commission.
(v) Interest (include cost in financing the land purchase,
improvements, or other borrowings).
(vi) Estimated other expenses (include general costs,
administrative costs, profit, etc.).
(vii) Total.
(4) Total land sales revenue:
(i) Estimated total land sales income.
(ii) Estimated other income.
(iii) Total income.
(c) Financial statements. (1) Submit a copy of the developer's
financial statements for the last full fiscal year. These statements
shall be prepared in accordance with generally accepted accounting
principles as prescribed by the Financial Accounting Standards Board
and generally accepted auditing standards as prescribed by the American
Institute of Certified Public Accountants, and shall be audited by an
independent licensed public accountant. They shall include a balance
sheet, a statement of profit and loss, a statement of changes in
financial condition and a certified opinion by the accountant. The
statements shall be no more than six months old on the date the
Statement of Record is submitted.
(2) If the audited statements are more than six months old at the
date of submission of the Statement of Record, or if the last full
fiscal year has ended within the last 90 days and audited Statements
are not yet available, the developer may submit a copy of the audited
statements for the previous full fiscal year and supplement them with
unaudited, interim statements so that the financial information is no
more than six months old on the date that the Statement of Record is
submitted. The interim statements may be prepared by company personnel
but must contain a balance sheet, a statement of profit and loss and a
statement of changes in financial condition and be prepared in
accordance with generally accepted accounting principles.
(d) Annual report. (1) Each year after the initial effective date,
the developer shall submit a copy of its latest financial statements.
These statements must meet the standards set out in Sec.
1010.212(c)(1), unless the developer has qualified for an exception
under Sec. 1010.212(e), and must be submitted within 120 days after
the close of the developer's fiscal year.
(2) If a developer has submitted its latest statements with a
consolidated filing since the close of its fiscal year and prior to the
end of the 120 day period, a second submission of the statements to
comply with this section is not necessary.
(3) If the developer no longer has an active sales program on the
date this report is due, the information set forth in Sec.
1010.310(c)(7)(iii) may be furnished in lieu of this report.
(e) Exceptions. (1) If the developer does not have audited
financial statements and the criteria in one of the following
exceptions are met, statements need not be audited and certified but
must meet all of the other requirements set forth in paragraphs (c)(1)
and (2) of this section.
(2) The term ``conveys title free of any mortgage or lien'' in
these exceptions is not intended to prohibit the taking of an
instrument as security for the lot purchase price after title is
conveyed. For the purposes of these exceptions, these definitions shall
apply:
(i) Deed shall mean a warranty deed, or its equivalent, which
conveys title free and clear of liens and encumbrances.
(ii) Assurance of Title Agreement shall mean a legal arrangement
whereby the purchaser is guaranteed a deed upon payment of no more than
the full purchase price of the lot (e.g. subdivision trust). In
addition to a copy of any Assurance of Title Agreement, the Director
may require additional documentation such as an attorney's opinion
letter to assure that the purchaser's title is fully protected.
(iii) Date of contract shall mean the date on which the contract or
agreement is signed by the purchaser.
(iv) Escrow or trust account as to down payments and deposits shall
mean an account, established in accordance with local real estate laws
or regulations, which assures the return to the purchaser of any monies
paid in the event title is not delivered to the purchaser in accordance
with the terms of the contract.
(3) The exceptions are:
(i) The aggregate sales price of all lots offered pursuant to a
common promotional plan equals $500,000.00 or less; or
(ii) Each of the following conditions of paragraphs (e)(3)(ii)(A)
and (B) of this section are met, plus the conditions of one of
paragraphs (e)(3)(ii)(C), (D), or (E) of this section:
(A) Down payments and deposits are held in an escrow or trust
account.
(B) The contract provides for delivery of a deed which conveys
title free of any mortgage or lien within 180 days of the signing of
the contract. (In lieu of delivery of a deed, the developer may submit
to ILSRP an Assurance of Title Agreement.)
(C) The aggregate sales prices of all lots offered pursuant to a
common promotional plan is at least $500,000 but less than $1,500,000.
(D) All facilities, utilities and amenities proposed by the
developer in the Property Report or sales contract have been completed
so that the lots in the Statement of Record are immediately usable for
the purpose for which they are sold.
(E) (1) The developer is contractually obligated to the purchaser
to complete all facilities, utilities and amenities proposed by the
developer in the Property Report and sales contract so that all lots
included in the Statement of Record will be usable for the purpose for
which they are sold by the dates set out in the Property Report, and;
(2) The developer has made financial arrangements, such as the
posting of surety bonds (corporate bonds or individual notes or bonds
are not acceptable), irrevocable letters of credit or the establishment
of escrow or trust accounts, which assure completion of all facilities,
utilities and amenities proposed by the developer in the Property
Report or contract.
(f) Newly-formed entity. If the developer is newly formed or has
not had any significant operating experience, an audited or unaudited
balance sheet and statements of receipts and disbursements of funds may
be submitted.
(g) Use of parent company statements. (1) If the developer is a
subsidiary company and does not have audited financial statements, the
Director may permit the use of the audited and certified statements of
the parent company: Provided, That those statements are accompanied by
an unconditional guaranty that the parent shall perform and fulfill the
obligations of the subsidiary. If this procedure is adopted, the
developer shall submit the following:
[[Page 79513]]
(i) The audited and certified financial statements of the parent
company, together with interim statements if necessary, which comply
with Sec. 1010.212(c).
(ii) A properly executed guaranty in a form acceptable to the
Director.
(2) In cases described in paragraph (g)(1) of this section, the
disclosure information required in Sec. 1010.112 shall be
appropriately amended to reference the parent company and not the
developer and must include a statement to the effect that the
developer's parent company (insert name) has entered into an
unconditional guaranty to perform and fulfill the obligations of the
developer.
(h) Opinions. If the accountant qualifies or disclaims his opinion,
the Director may accept the statements and require such additional
disclosure as the Director deems necessary in the public interest or
for the protection of purchasers.
(i) Copies for prospective purchasers. Copies of the financial
statements filed with the Statement of Record shall be made available
to prospective purchasers upon request. A supply of the latest
submitted statements shall be maintained at whatever place, or places,
as is necessary to allow immediate delivery upon request by a
prospective purchaser. These statements shall contain financial
information only and shall not include any promotional material such as
that usually set forth in annual reports.
(j) Change from audited to unaudited statements. (1) Developers who
file audited statements must continue with audited statements
throughout the duration of the registration unless, at a later date,
the developer submits amendments which demonstrate to the satisfaction
of the Director that it then qualifies for an exception from audited
statements under paragraph (e)(3)(ii) of this section. For purposes of
paragraph (e)(3)(ii)(C) of this section, the Director will consider the
aggregate sales prices of only the lots yet to be sold, and may
consider whether any additions to the subdivisions or reacquisitions of
lots already sold would be likely to cause the dollar limits to be
exceeded.
(i) The aggregate sales prices of the lots yet to be sold in the
subdivision has been reduced to less than $1,500,000.00, and that it
will not exceed this amount through further additions to the
subdivision, or through the reacquisition of lots already sold, and;
(ii) The sales contract provides for delivery of a deed within 120
days of the date of the contract which conveys title free and clear of
any mortgage or lien or the developer files an Assurance of Title
Agreement with ILSRP, and;
(iii) Any down payments or deposits are held in an escrow or trust
account, or;
(iv) The developer then qualifies for exception (e)(3)(iii) or (iv)
of this section.
(2) The Director may allow a developer, who has made sales prior to
registration, to submit unaudited statements under the provisions of
paragraph (j)(1)(i) of this section. The developer must demonstrate to
the satisfaction of the Director that the acceptance of unaudited
statements would not be a detriment to the public interest or to the
protection of purchasers.
Sec. 1010.214 Recreational facilities.
(a) Submit a synopsis of the proposed plans and estimated cost of
any proposed or partially constructed recreational facility disclosed
in Sec. 1010.114. This item should include the general dimensions and
a brief description of the facility but it should not include
blueprints or similar technical materials.
(b) Submit a copy of any bond or escrow arrangements to assure
completion of the recreational facilities disclosed in Sec. 1010.114
which are not structurally complete.
(c) Submit a copy of the lease for any leased recreational
facility.
Sec. 1010.215 Subdivision characteristics and climate.
(a) Submit two copies of a current geological survey topographic
map, or maps, of the largest scale available from the U.S. Geological
Survey with an outline of the entire subdivision and the area included
in this Statement of Record clearly indicated. Photo copies made by the
developer are not acceptable. Do not shade the areas on the maps which
have been outlined.
(b) If drainage facilities are proposed but not yet completed,
submit a synopsis of the developer's proposed plans that includes a
description of the system of collecting surface waters; a description
of the steps to be taken to control erosion and sedimentation and the
estimated cost of the drainage facilities.
(c) Submit copies of any bonds, escrow or trust accounts or other
financial assurance of completion of the drainage facilities.
(d) State whether the jurisdiction in which the subdivision is
located has a system for rating the land for fire hazards.
Sec. 1010.216 Additional information.
(a) Property Owners' Association. (1) If the association has been
formed as a legal entity, submit a copy of the articles of association,
bylaws or similar documents, and a copy of the charter or certificate
of incorporation.
(2) If the developer exercises any control over the association,
state whether any contracts have been executed between the association
and the developer or any affiliate or principal of the developer. If
there have been, briefly summarize the terms of the contracts, their
purpose, their duration and the method and rate of payment required by
the contract. State whether the association may modify or terminate the
contracts after the owners assume control of the association.
(3) State whether there is any agreement which would require the
association to reimburse the developer, its affiliates or successors
for any attorney's fees or costs arising from an action brought against
them by the association or individual property owners regardless of the
outcome of the action.
(4) If the answer to paragraph (a)(2) or (a)(3) of this section is
in the affirmative, disclosure may be required in Sec. 1010.116(a) at
the discretion of the Director.
(5) Submit a copy of any membership agreement or similar document.
(b) Price range, type of sales and marketing. (1) State the price
range of lots in the subdivision.
(2) State the type of sales to be made, i.e., contract for deed,
cash, deed with security instrument, etc.
(3) Describe the methods of advertising and marketing to be used
for the subdivision. The description should include, but need not be
limited to, information on such matters as to:
(i) Whether the developer will employ his own sales force or will
contract with an outside group;
(ii) Whether wide area telephone solicitation will be employed;
(iii) Whether presentations will be made away from the immediate
vicinity of the subdivision and/or if prospective purchasers will be
furnished transportation from distant cities to the subdivision;
(iv) Whether mass mailing techniques will be used and gifts offered
to those who respond.
(4) For any subdivision that meets any of the criteria in
paragraphs (b)(4)(i) through (iii) of this section, submit a copy of
any advertising or promotional material that is, or has been, used for
the subdivision. Amendments to reflect changes in advertising or
promotional material need be filed only when there
[[Page 79514]]
is a material change related to one of the above factors. Depending
upon the content of the material submitted, the Director may require
additional warnings in the Property Report portion. This requirement
applies to any subdivision that:
(i) Mentions or refers to recreational facilities which are not
disclosed in Sec. 1010.114, or;
(ii) Promotes the sale of lots based on the investment potential or
expected profits, or;
(iii) Contains information which is in conflict with that disclosed
in this Statement of Record.
(c) Violations and litigation. (1) Submit a copy of the
complaint(s), the answer(s) and the decision(s) for any litigation
listed in Sec. 1010.116(c).
(2) If it is indicated in Sec. 1010.116(c) that the developer or
any of the parties involved in the subdivision are, or have been, the
subject of any bankruptcy proceedings, furnish a copy of the schedules
of liabilities and assets (or a recap of those schedules); the petition
number; the date of the filing of the petition; names and addresses of
the petitioners, trustee and counsel; the name and location of the
court where the proceedings took place and the status or disposition of
the petition. Explain, briefly, the cause of the action.
(3) Furnish a copy of any orders issued in connection with any
violations listed in Sec. 1010.116(c).
(d) Resale or exchange program. (1) If it is stated in Sec.
1010.116(d)(3) that there is an exchange program which provides
sufficient lots to satisfy all requests for exchange, describe the
method used to determine the number of lots required; state whether
these lots have been reserved or set aside; whether additional lots
will be provided if the lots available for exchange are exhausted and
the source of any additional lots.
(e) Unusual situations. (1) Foreign subdivisions. If the
subdivision is located outside the several States, the District of
Columbia, the Commonwealth of Puerto Rico or the territories or
possession of the United States, the Statement of Record shall be
submitted in the English language and all supporting documents,
including copies of any laws which restrict the ownership of land by
aliens, shall be submitted in their original language and shall be
accompanied by a translation into English.
Sec. 1010.219 Affirmation.
The affirmation set forth in section XXVIII of the appendix to this
part: Affirmation of Senior Executive Officer shall be executed by the
senior executive officer or a duly authorized agent:
Sec. 1010.310 Annual report of activity.
(a) As an integral part of the Statement of Record, the developer
shall file with the Director an Annual Report of Activity on any
initial or consolidated registration not under suspension. For this
purpose, only one Annual Report of Activity will be expected for
subdivisions on which developers have filed consolidations. For
registrations certified by a state as provided for in Sec. 1010.500, a
developer need file only one Annual Report of Activity for any
registration for which the ILSRP number is the same (alphabetic
designators indicate that the registration has been treated as a
consolidation).
(b) The report shall be submitted within 30 days of the annual
anniversary of the effective date of the initial Statement of Record.
(c) The report shall contain the following information:
(1) Subdivision name and address.
(2) Developer's name, address and telephone number.
(3) Agent's name, address and telephone number.
(4) Interstate Land Sales Registration number.
(5) The date on which the initial filing first became effective.
(6) The number of registered lots, parcels or units which are
unsold as of the date on which the report is due.
(7) One of the following:
(i) A statement that the developer is still engaged in land sales
activity at the subject subdivision and that there have been no changes
in material fact since the last effective date was issued which would
require an amendment to the Statement of Record; or
(ii) A statement that the developer is still engaged in land sales
activity at the subject subdivision, that material changes have
occurred since the last effective date, and that corrected pages to the
Property Report portion or Additional Information and Documentation
portion of the Statement accompany the report; or
(iii) A statement that the developer is no longer engaged in land
sales activity at the subject subdivision, together with the reason the
developer is no longer selling (e.g., all lots sold to the public or
the remaining lots sold to another developer, along with the date of
sale and the new developer's name, address and telephone number). A
request may be made that the Statement of Record be voluntarily
suspended. The request should be submitted in duplicate and will become
effective upon the counter-signature of the Director (or an authorized
Designee) with the duplicate being returned to the developer.
(8) The report shall be dated and shall be signed by the senior
executive officer of the developer on a signature line above his typed
name and title. The senior executive officer's acknowledgement shall be
attested to or certified by a notary public or similar public official
authorized to attest or certify acknowledgements in the jurisdiction in
which the report is executed.
(d) If the report indicates that there are 101 or more registered
lots, parcels or units remaining for sale, the report shall be
accompanied by an amendment fee in the amount and form prescribed in
Sec. 1010.35.
(e) Failure to submit the report when due shall be grounds for an
action to suspend the effective Statement of Record.
Subpart C--Certification of Substantially Equivalent State Law
Sec. 1010.500 General.
(a) This subpart establishes procedures and criteria for certifying
state land sale or lease disclosure programs and State state land
development standards programs. The purpose of State Certification is
to lessen the administrative burden on the individual developer,
arising where there are duplicative state and federal Federal
registration and disclosure requirements, without affecting the level
of protection given to the individual purchaser or lessee. If the
Director determines that a state has adopted and is effectively
administering a program that gives purchasers and lessees the same
level of protection given to them by the Interstate Land Sales
Registration Program, then the Director shall certify that state.
Developers who accomplish an effective registration with a state in
which the land is located after the Director has certified the state
may satisfy the registration requirements of the Director by filing
with the Director materials designated by agreement with certified
states in lieu of the federal Federal Statement of Record and Property
Report.
(b) A state that is certified by the Director shall be known as the
situs certified state for all land located within its borders.
(c) After a developer is effectively registered with the Director
through a certified state, the Director has the same authority over
that developer as the Director has over developers who file directly
with the Director. This includes the authority to subpoena information
[[Page 79515]]
and to examine, evaluate and suspend a developer's registration under
sections 1407(d) and (e) of the Act and Sec. 1010.45(b)(1) and (b)(2)
of these regulations.
(d) The prohibitions against the use of the Property Report
contained in Sec. 1010.29 apply to state disclosure materials and
substantive development standards. In addition, for purposes of this
paragraph, references made to the Director, ILSRP and the Bureau in
Sec. 1010.29 will include a reference to the equivalent state officer
or agency.
(e) The Purchaser's Revocation Rights, Sales Practices and
Standards rules contained in part 1011 of these regulations apply to
developers who register with the Director through certified States. All
of the rules in part 1011 apply, excepting the disclaimer statement in
Sec. 1011.50(a) which is modified to read as follows: ``Obtain the
Property Report or its equivalent, required by Federal and State law
and read it before signing anything. No Federal or State agency has
judged the merits or value, if any, of this property.''
(f) Developers are obliged to pay filing fees as set forth in Sec.
1010.35 of this part.
Sec. 1010.503 Notice of certification.
(a) If the Director determines that a state qualifies for
certification under Sec. 1010.501(a) or (b), the Director shall so
notify the state in writing. The state will be effectively certified
under the section and as of the date specified in the notice.
(b) If the Director determines that a state does not meet the
standards for certification, the Director shall so notify the state in
writing. The notice will specify particular changes in state law,
regulations or administration that are needed to obtain certification.
The Director shall not be bound in advance to certify a state that
makes the suggested changes if other deficiencies become apparent at a
later time.
(c) The Director's final determination to accept or reject a
State's Application for Certification of Land Sales Program shall be
published in the Federal Register.
(d) A state's certification will remain in effect until it is
voluntarily suspended by the state or withdrawn by the Director. A
state can voluntarily suspend its certification by notifying the
Director in writing. The suspension will take effect as of the date and
time specified in the notice to the Director, or upon receipt by the
Director if no date is specified. The Director may withdraw
certification as provided in Sec. 1010.505.
Sec. 1010.504 Cooperation among certified states and between
certified states and the Director.
(a) By filing an Application for Certification of State Land Sales
Program pursuant to Sec. 1010.502, a state agrees that, if it is
certified by the Director, it will:
(1) Accept for filing and allow to be distributed as the sole
disclosure document, a disclosure document currently in effect in the
situs certified state. Only those documents filed with the situs state
after certification by the Director must automatically be accepted by
other certified states;
(2) Certify copies of all disclosure documents, amendments and
consolidations filed with it by developers of land located within its
borders for and as needed by developers required to submit certified
copies to the Director and all other certified states. The
certification shall indicate whether the documents are currently in
effect. The certification should be in the format set forth in section
XXIX of the appendix to this part: Form for Certification for
Disclosure Documents.
(3) Assist and cooperate with the Director and other certified
states by requiring that developers of land within its borders amend
disclosure documents if any change occurs in any representation of
material fact required to be stated in the disclosure documents,
including a change resulting from the developer's compliance with the
requirements of the law in another certified state. The state shall
require developers to send certified copies of the amended documents to
the Director and requesting certified states. All amendments to such
materials, which reflect changes in material facts regarding the
subdivision, shall be submitted to the situs certified state
authorities within 15 days of the date on which the developer knows, or
should have known, of such change. Certified copies of the disclosure
documents shall be submitted by the developer to the Director and the
other certified states within 15 days after it becomes effective under
the situs certified state laws.
(4) Continue to effectively operate its Land Sales Program as that
Program is described in the Application for Certification and as it was
certified by the Director.
(5) Assist and cooperate with the Director by monitoring the sales
practices of developers registered with it directly or through another
certified state, and by reporting to the Director any violations of the
Act, including but not limited to the required contract provisions,
revocation rights and anti-fraud provisions of 15 U.S.C. 1703, or the
regulations.
(b) A state required to accept the disclosure documents of another
situs certified state pursuant to paragraph (a)(1) of this section,
may, in its discretion, require the developer to furnish it with copies
certified pursuant to paragraph (a)(2) of this section.
(c) No state shall be prevented from establishing substantive or
disclosure requirements which exceed the federal Federal standard
provided that such requirements are not in conflict with the Act or
these regulations. For example, a certified state may impose additional
disclosure requirements on developers of land located within its
borders but may not impose additional disclosure requirements on
developers whose disclosure documents it is required to accept pursuant
to paragraph (a)(1) of this section. However, a certified state may
impose additional nondisclosure requirements on out of state developers
even though the developer is registered in the certified state in which
the land is located.
(d) After a developer is effectively registered with a certified
state through a situs certified state, either or both certified states
may exercise full enforcement authorities and powers over that
developer according to applicable law and regulations.
(e) The Director shall cooperate with the certified states by
offering a forum for nonbinding arbitration of disputes between two or
more certified States arising out of the State Certification Program.
Sec. 1010.505 Withdrawal of State state certification.
(a) The Director shall periodically review the laws, regulations
and administration thereof, of a certified state. If the Director finds
that, taken as a whole, the laws, regulations or administration
thereof, no longer meet the requirements of subpart C, then the
Director may issue a notice to withdraw the certification of that
state.
(b) The notice of proceedings to withdraw a state's certification
will be issued to the state by the Director pursuant to Sec. 1012.236.
The Director may, after notice and after an opportunity for a hearing,
pursuant to Sec. 1012.237, issue an order withdrawing certification.
In the event that a withdrawal order is issued, the order shall remain
in effect until the state has amended its laws, regulations or the
administration thereof or has otherwise complied with the requirements
of the order. When the state has complied with the requirements of the
order, the Director shall so declare and the
[[Page 79516]]
withdrawal order shall cease to be effective.
(c) Withdrawal orders issued pursuant to this subsection will be
effective as of the date the order is received by the state. The
withdrawal order shall be published in the Federal Register.
(d) The rules of 12 CFR part 1080, unless otherwise specified in 12
CFR part 1012, subpart D, will generally apply to hearings on
withdrawal of a state's certification.
Sec. 1010.506 State/Federal filing requirements.
(a)(1) If the Director has certified a state under Sec. 1010.501,
the Director shall accept for filing disclosure materials or other
acceptable documents which have been approved by the certified state
within which the subdivision is located. Only those filings made by the
developer with the state after the state was certified by the Director
shall be automatically accepted by the Director.
(2) Retroactive application of the effectiveness of state's
certification to a specified date may be granted on a state-by-state
basis, where the Director determines that retroactive application will
not result in automatic federal Federal registration of any state
filing that has not met the requirements of the certified state laws.
(b) For a developer to be registered with the Director, the
developer shall file with the Director a state certified copy of the
Property Report or its equivalent, and any other documentation as
stipulated in the Director's Notice of Certification to the state.
(c) The documents and materials filed under paragraph (b) of this
section will be automatically effective as the Federal Statement of
Record and Property Report after these materials and the proper filing
fee have been received by the Director.
(d) The Director has authority pursuant to Sec. 1010.45(b)(1) and
(b)(2) to suspend individual filings which fail to meet the
requirements of the certified state's law or regulations or the
standards in the certification agreement whether or not the state
agency has initiated a similar action.
(e)(1) State accepted materials filed with the Director pursuant to
this section must be amended to reflect any amendment to such materials
made effective by the state. All amendments to such materials must be
submitted to the Director within 15 days after becoming effective under
the applicable state laws. Amendments are automatically effective upon
their receipt by the Director and the provisions of Sec. 1010.45(b)(1)
and (2) apply to amendments filed under this section.
(2) Amendments shall include or be accompanied by:
(i) A letter from the developer giving a narrative statement fully
explaining the purpose and significance of the amendment and referring
to that section and page of the material which is being amended, and;
(ii) A signed state acceptance certification substantially the same
as that required by Sec. 1010.504(a)(2).
(f) If a certified state suspends the registration of a particular
subdivision for any reason, the subdivision's federal Federal
registration with the Director shall be automatically suspended as a
result of the state action. No action need be taken by the Director to
effect the suspension.
(g) A state is certified only with regard to land located within
the state borders. The Director is not required to accept filings which
have been accepted by a certified state if the land which is the
subject of the filing is not located within that certified state. For
example, if State A is certified by the Director and State B is not,
the Director is not required to accept filings from State B simply
because State A accepts filings from State B.
Sec. 1010.507 Effect of suspension or withdrawal of certification
granted under Sec. 1010.501(a): Full disclosure requirement.
(a) If a state certified under Sec. 1010.501(a) suspends its own
certification or has its certification withdrawn under Sec. 1010.505,
the Federal disclosure materials accepted and made effective by the
Director, pursuant to Sec. 1010.506, prior to the suspension or
withdrawal shall remain in effect unless otherwise suspended by the
Director.
(b) In the event that there is a change in a material fact with
regard to a subdivision that remains registered under the provisions of
paragraph (a) of this section, the developer shall file a new
registration with the Director meeting the requirements of the then
applicable Federal registration regulations. Modifications of the
Federal format may be used as specified by the Director.
Sec. 1010.508 Effect of suspension of certification granted under
Sec. 1010.501(b): Sufficient protection requirement.
(a) If a state certified under Sec. 1010.501(b) suspends its own
certification or has its certification withdrawn under Sec. 1010.505,
the effectiveness of the Federal disclosure materials accepted and made
effective by the Director, pursuant to Sec. 1010.506, prior to the
suspension or withdrawal shall terminate ninety (90) days after the
notice of withdrawal order is published in the Federal Register as
provided in Sec. 1010.505(c).
(b) At the end of the ninety day period, or during the ninety day
period in the event that there is a change in material fact with regard
to a subdivision that remains registered under the provisions of
paragraph (a) of this section, the developer shall file a new
registration with the Director meeting the requirements of the then
applicable Federal registration regulations. Modifications of the
Federal format may be used as specified by the Director.
Sec. 1010.552 Previously accepted state filings.
(a) Materials filed with a state and accepted by the HUD Secretary
as a Statement of Record prior to January 1, 1981, pursuant to 24 CFR
1010.52 through 1010.59 (as published in the Federal Register on April
10, 1979) may continue in effect. However, developers must comply with
the applicable amendments to the Federal Act and the regulations
thereunder. In particular, see Sec. Sec. 1010.558 and 1010.559, which
require that the Property Report and contracts or agreements contain
notice of purchaser's revocation rights. In addition see Sec.
1011.15(f), which provides that it is unlawful to make any
representations with regard to the developer's obligation to provide or
complete roads, water, sewers, gas, electrical facilities or
recreational amenities, unless the developer is obligated to do so in
the contract.
(b) If any such filing becomes inactive or suspended under the laws
of the state, the registration with the Director shall be ineffective
from that time.
(c) Such Statement of Record may be suspended pursuant to Sec.
1010.45.
(d) The Director may refuse to accept any particular filing under
this section when it is determined that acceptance is not in the public
interest.
(e) The Director may require such changes, additional information,
documents or certification as the Director determines to be reasonably
necessary or appropriate in the public interest.
Sec. 1010.556 Previously accepted state filings--amendments and
consolidations.
(a) Amendments. (1) General requirements. State accepted materials,
filed with the Director pursuant to Sec. 1010.552, shall be amended to
reflect any amendment to such materials made effective by the state or
any change of
[[Page 79517]]
a material fact regarding the subdivision. All amendments to such
materials, which reflect changes in material facts regarding the
subdivision, shall be submitted to the state authorities within 15 days
of the date on which the developer knows, or should have known, of such
change and to the Director within 15 days after it becomes effective
under the applicable State laws. However, such amendment shall not be
effective as a Federal registration until the Director has determined
that the amendment meets all applicable requirements of these
regulations.
(2) Amendments shall include or be accompanied by:
(i) A letter from the developer giving a narrative statement fully
explaining the purpose and significance of the amendment and referring
to that section and page of the Statement of Record which is being
amended, and;
(ii) All amended pages of the state accepted materials filed with
the Director. These pages shall be copied together with their
amendments. Each such page shall have its date of preparation in the
lower right hand corner, and;
(iii) A signed state acceptance certification, and;
(iv) The appropriate fees as indicated in Sec. 1010.35.
(b) Consolidations. (1) When consolidations allowed. If lots are to
be registered pursuant to Sec. 1010.552 which are in the same common
promotional plan with other lots already registered with the Director,
then new consolidated state accepted materials including such lots may
be filed with the Director as a Statement of Record following the
format of the previously accepted filing.
(2) Consolidated Statements of Record shall include or be
accompanied by:
(i) State accepted consolidation materials which are also
acceptable to the Director as a Statement of Record (state property
report inclusive). These state accepted consolidation materials shall
cover all lots previously registered in the common promotional plan
except those deleted pursuant to other provisions in these regulations.
These materials shall also include information and items required for
state accepted materials filed as an initial registration Statement of
Record, except that, supporting documentation in materials previously
made effective by the Director for other lots in the subject common
promotional plan may be included incorporated by reference into the new
consolidation materials submitted as a Statement of Record. However,
such documentation may be incorporated by reference included only if it
is applicable to the new consolidated lots as well as to the previously
registered lots.
(ii) A signed state acceptance certification.
(iii) The appropriate fees as indicated in Sec. 1010.35.
(c) Effective date; state filing. The effective dates of state
materials filed as amendments and consolidated Statements of Record
shall be determined in accordance with the provisions of Sec. 1010.21.
Sec. 1010.558 Previously accepted state filings--notice of revocation
rights on property report cover page.
(a)(1) The cover page on Property Reports for filings made with the
Director pursuant to Sec. 1010.552 shall be prepared in accordance
with Sec. 1010.105 and shall include the paragraphs set forth in
section XXX of the appendix to this part: Language to be Included on
Property Report Cover Page.
(2) If the purchaser is entitled to a longer revocation period by
operation of State law, that period becomes the Federal revocation
period and the cover page must reflect the longer period, rather than
the seven days.
(b)(1) If a deed is not delivered within 180 days of the signing of
the contract or agreement of sale or unless certain provisions are
included in the contract or agreement, the purchaser is entitled to
cancel the contract within two years from the date of signing the
contract or agreement.
(2) The deed must be a warranty deed, or where such a deed is not
commonly used, a similar deed legally acceptable in the jurisdiction
where the lot is located. The deed must be free and clear of liens and
encumbrances.
(3) The contract provisions are:
(i) A legally sufficient and recordable lot description, and;
(ii) A provision that the seller will give the purchaser written
notification of purchaser's default or breach of contract and the
opportunity to remedy the default or breach within 20 days of the
notice; and
(iii) A provision that, if the purchaser loses rights and interest
in the lot because of the purchaser's default or breach of contract
after 15 percent of the purchase price, exclusive of interest, has been
paid, the seller shall refund to the purchaser any amount which remains
from the payments made after subtracting 15 percent of the purchase
price, exclusive of interest, or the amount of the seller's actual
damages, whichever is the greater.
(4) If a deed is not delivered within 180 days of the signing of
the contract or if the necessary provisions are not included in the
contract, the following statement shall be used in place of any other
rescission language: ``Under Federal law you may cancel your contract
or agreement of sale any time within two years from the date of
signing.''
Sec. 1010.559 Previously accepted state filings--notice of revocation
rights in contracts and agreements.
(a)(1) All contracts or agreements, including promissory notes used
in sale of lots for filings made with the Director pursuant to Sec.
1010.552, must contain the language set forth in section XXXI of the
appendix to this part: Notice of Revocation Rights in boldface type
(which must be distinguished from the type used for the rest of the
contract) on the face or signature page above all signatures:
(2) If the purchaser is entitled to a longer revocation period by
operation of State law or the Act, that period becomes the Federal
revocation period and the contract or agreement must reflect the longer
period, rather than the seven days. The language shall be consistent
with that shown on the Cover Page (see Sec. 1010.558).
(b) The above revocation provisions may not be limited or qualified
in the contract or other document by requiring a specific type of
notice or by requiring that notice be given at a specified place.
Appendix A: to Part 1010: Standard and Model Forms and Clauses
I. Forms for Developer's Affirmation for Land Sale--Sec. 1010.13(a)(9)
Developer's Name-------------------------------------------------------
Developer's Address----------------------------------------------------
Purchaser's Name(s)----------------------------------------------------
Purchaser's Address(es) (including county)-----------------------------
Name of Subdivision----------------------------------------------------
Legal Description of Lot(s) Purchased----------------------------------
I hereby affirm that all of the requirements of the MSA exemption
as set forth in 15 U.S.C. 1702(b)(8) and 12 CFR 1010.13 have been met
in the sale or lease of the lot(s) described above.
I also affirm that I submit to the jurisdiction of the Interstate
Land Sales Full Disclosure Act with regard to the sale or lease cited
above.
(Date)-----------------------------------------------------------------
(Signature of Developer or Authorized Agent)---------------------------
(Title)----------------------------------------------------------------
II. Language Notifying Buyer of Option to Cancel Contract--Sec.
1010.15(b)(5)(i)
You have the option to cancel your contract or agreement of sale by
notice to the seller until midnight of the seventh day following the
date of signing of the contract or agreement.
If you did not receive a Lot Information Statement prepared
[[Page 79518]]
pursuant to the rules and regulations of the Bureau of Consumer
Financial Protection in advance of your signing the contract or
agreement, the contract or agreement of sale may be cancelled at your
option for two years from the date of signing.
III. Sample Lot Information Statement and Sample Receipt--Sec.
1010.15(b)(11)
Sample Format
(Use of the following headings and first paragraph are mandatory.)
Lot Information Statement
Important: Read Carefully Before Signing Anything
The developer has obtained a regulatory exemption from registration
under the Interstate Land Sales Full Disclosure Act. One requirement of
that exemption is that you must receive this Statement prior to the
time you sign an agreement (contract) to purchase a lot.
Right To Cancel
(Under this heading the developer is to state the specific
rescission rights provided for in the contract pursuant to
1010.15(b)(5)(i)).
Risk of Buying Land
(Under this heading the developer is to list the following
information:)
There are certain risks in purchasing real estate that you should
be aware of. The following are some of those risks:
The future value of land is uncertain and dependent upon many
factors. Do not expect all land to automatically increase in value.
Any value which your lot may have will be affected if roads,
utilities and/or amenities cannot be completed or maintained.
Any development will likely have some impact on the surrounding
environment. Development which adversely affects the environment may
cause governmental agencies to impose restriction on the use of the
land.
In the purchase of real estate, many technical requirements must be
met to assure that you receive proper title and that you will be able
to use the land for its intended purpose. Since this purchase involves
a major expenditure of money, it is recommended that you seek
professional advice before you obligate yourself.
If adequate provisions have not been made for maintenance of the
roads or if the land is not served by publicly maintained roads, you
may have to maintain the roads at your expense.
If the land is not served by a central sewage system and/or water
system, you should contact the local authorities to determine whether a
permit will be given for an on-site sewage disposal system and/or well
and whether there is an adequate supply of water. You should also
become familiar with the requirements for, and the cost of, obtaining
electrical service to the lot.
Developer Information
(Under this heading the developer is to list the following
information:)
Developer's Name:------------------------------------------------------
Address:---------------------------------------------------------------
Telephone Number:------------------------------------------------------
Lot Information
(Under this heading the developer is to list the following
information:)
Lot Location:----------------------------------------------------------
(Enter a statement disclosing all liens, reservations, taxes,
assessments, easements and restrictions applicable to the lot. A copy
of the restrictions may be attached in lieu of recitation.)
Suppliers of Utilities and Issuers of Permits
(Under this heading the developer is to list the name, address and
phone number of the appropriate governmental agency or agencies, if
any, that will provide information on permits or other requirements for
water, sewer and electrical installations. The information will also
contain the name, address and telephone number of the suppliers of such
utilities which can provide information to the purchaser on costs and
availability of such services. A chart similar to the one below may be
used to supply this information).
Listed below are contact points for determining permit
requirements, if any, and to obtain information on approximate costs
and availability for the listed services:
------------------------------------------------------------------------
Name, address and telephone
number of
-------------------------------
Governmental
agency Supplier
------------------------------------------------------------------------
Water
Sewer
Electricity
------------------------------------------------------------------------
If misrepresentations are made in the sale of this lot to you, you
may have rights under the Interstate Land Sales Full Disclosure Act. If
you have evidence of any scheme, artifice or device used to defraud
you, you may wish to contact: Office of Nonbank Supervision, Interstate
Land Sales Registration Program, Bureau of Consumer Financial
Protection, 1700 G Street NW., Washington, DC 20006.
(The Receipt is to be in the following form:)
Sample Receipt for Lot Information Statement
Purchaser (print or type):---------------------------------------------
Date:------------------------------------------------------------------
Signature of purchaser:------------------------------------------------
-----------------------------------------------------------------------
Street Address:--------------------------------------------------------
City:------------------------------------------------------------------
State:-----------------------------------------------------------------
Zip:-------------------------------------------------------------------
Name of salesperson (print or type):-----------------------------------
Signature of salesperson:----------------------------------------------
IV. Request for Multiple Site Subdivision Exemption--Sec.
1010.15(c)(1)
Request for Multiple Site Subdivision Exemption
Developer:
Name:------------------------------------------------------------------
Address:---------------------------------------------------------------
Telephone No.:---------------------------------------------------------
Agent:
Name:------------------------------------------------------------------
Address:---------------------------------------------------------------
Telephone No.:---------------------------------------------------------
(Insert a general description of the developer's method of
operation.)
I affirm that I am, or will be, the developer of the property and/
or method of operation described above.
I affirm that the lots in said property will be sold in compliance
with all of the requirements of 12 CFR 1010.15.
I further affirm that the statements contained in all documents
submitted with this request for an Exemption Order are true and
complete.
Date:------------------------------------------------------------------
Signature:-------------------------------------------------------------
Title:-----------------------------------------------------------------
WARNING: 18 U.S.C. 1001 provides, among other things, that whoever
knowingly and willingly makes or uses a document or writing containing
any false, fictitious, or fraudulent statement or entry, in any matter
within the jurisdiction of any department or agency of the United
States, shall be fined not more than $10,000 or imprisoned for not more
than 5 years or both.
V. Request for Regulatory Exemption Order--Sec. 1010.16(c)
REQUEST FOR EXEMPTION ORDER
Subdivision------------------------------------------------------------
Location (including county)--------------------------------------------
Developer--------------------------------------------------------------
Address----------------------------------------------------------------
Authorized Agent or President of Developer-----------------------------
-----------------------------------------------------------------------
Address----------------------------------------------------------------
Number of Lots Subject to Exemption Request----------------------------
Description of Lots (list lot and block number or other identifying
designation)-----------------------------------------------------------
-----------------------------------------------------------------------
I affirm that I am the developer or owner of the property described
above or will be the developer or owner at the
[[Page 79519]]
time the lots are offered for sale to the public, or that I am the
agent authorized by the developer or owner to complete this statement.
I further affirm that the statements contained in all documents
submitted with the request for an exemption order are true and
complete.
-----------------------------------------------------------------------
(Date)
-----------------------------------------------------------------------
(Signature of Developer, Owner or Authorized Agent)
-----------------------------------------------------------------------
(Title)
WARNING: Section 15 U.S.C. 1717 provides: ``Any person who
willfully violates any of the provisions of this title or of the rules
and regulations or any person who willfully, in a Statement of Record
filed under, or in a Property Report issued pursuant to this title,
makes any untrue statement of a material fact shall upon conviction be
fined not more than $10,000.00 or imprisoned not more than 5 years, or
both.''
VI. Developer's Affirmation for Advisory Opinion--Sec. 1010.17(b)(3)
Developer's Affirmation
Name of Subdivision----------------------------------------------------
Location (Including County and State)----------------------------------
Name of Developer------------------------------------------------------
Address of Developer---------------------------------------------------
Name of Agent----------------------------------------------------------
Address of Agent-------------------------------------------------------
Number of Lots in Subdivision------------------------------------------
Number of Acres in Subdivision-----------------------------------------
I affirm that I am the developer or owner of the property described
above or will be the developer or owner at the time the lots are
offered for sale to the public, or that I am the agent authorized by
the developer or owner to complete this statement.
I further affirm that the statements contained in all documents
submitted with the request for an Advisory Opinion are true and
complete.
-----------------------------------------------------------------------
(Date)
-----------------------------------------------------------------------
(Signature)
-----------------------------------------------------------------------
(Title);
WARNING: 15 U.S.C. 1717 provides: ``Any person who willfully
violates any of the provisions of this title or of the rules and
regulations or any person who willfully, in a Statement of Record filed
under, or in a Property Report issued pursuant to this title, makes any
untrue statement of a material fact shall upon conviction be fined not
more than $10,000.00 or imprisoned not more than 5 years, or both.''
VII. Initial and Consolidated Registration Fee Schedule--Sec.
1010.35(b)
------------------------------------------------------------------------
Number of lots Fees
------------------------------------------------------------------------
200 or fewer lots............................................ $800
201 or more lots............................................. 1,000
------------------------------------------------------------------------
VIII. Property Report for Statement of Record--Sec. 1010.100(b)
Property Report
Heading and Section Number
Cover Sheet.................................................. 1010.105
Table of Contents............................................ 1010.106
Risks of Buying Land, Warnings............................... 1010.107
General Information.......................................... 1010.108
Title and Land Use........................................... 1010.109
(a) General Instructions
(b) Method of Sale
(c) Encumbrances, Mortgages and Liens
(d) Recording the Contract and Deed
(e) Payments
(f) Restrictions
(g) Plats, Zoning, Surveying, Permits, Environment
Roads........................................................ 1010.110
Utilities.................................................... 1010.111
(a) Water
(b) Sewer
(c) Electricity
(d) Telephone
(e) Fuel or other Energy Source
Financial Information........................................ 1010.112
Local Services............................................... 1010.113
Recreational Facilities...................................... 1010.114
Subdivision Characteristics and Climate...................... 1010.115
(a) General Topography
(b) Water Coverage
(c) Drainage and Fill
(d) Flood Plain
(e) Flooding and Soil Erosion
(f) Nuisances
(g) Hazards
(h) Climate
(i) Occupancy
Additional Information....................................... 1010.116
(a) Property Owners' Association
(b) Taxes
(c) Violations and Litigation
(d) Resale or Exchange Program
(e) Unusual Situations
1. Leases
2. Foreign Subdivision
3. Time Sharing
4. Membership
(f) Equal Opportunity in Lot Sales
(g) Listing of lots
Cost Sheet................................................... 1010.117
Receipt, Agent Certification and Cancellation Page........... 1010.118
ADDITIONAL INFORMATION AND DOCUMENTATION
General Information.......................................... 1010.208
Title and Land Use........................................... 1010.209
Roads........................................................ 1010.210
Utilities.................................................... 1010.211
Financial Information........................................ 1010.212
Recreational Facilities...................................... 1010.214
Subdivision Characteristics.................................. 1010.215
Additional Information....................................... 1010.216
Affirmation.................................................. 1010.219
The Bureau's OMB control number for this information collection is: 3170-
0012.
IX. Sample Page for Statement of Record--1010.102(e)
SAMPLE PAGE
ROADS
Here we discuss the roads that lead to the subdivision, those
within the subdivision and the location of nearby communities.
ACCESS TO THE SUBDIVISION.
County road 43 leads to the subdivision. It has two lanes
and the width of the wearing surface is 22 feet. It's paved with a
macadam surface.
This road is maintained by Bottineau County with County funds. No
improvements are planned at this time.
ACCESS WITHIN THE SUBDIVISION.
The roads within the subdivision will be located on rights of way
dedicated to the public.
We are responsible for constructing the interior roads. There will
be no additional cost to you for this construction.
WE HAVE NOT SET ASIDE ANY FUNDS IN AN ESCROW OR TRUST ACCOUNT OR
MADE ANY OTHER FINANCIAL ARRANGEMENTS TO ASSURE COMPLETION OF THE
ROADS, SO THERE IS NO ASSURANCE WE WILL BE ABLE TO COMPLETE THE ROADS.
At present, the roads are under construction and do not provide
access to the lots in Units 2 and 3 during wet weather. The succeeding
chart describes their present condition and estimated completion dates.
----------------------------------------------------------------------------------------------------------------
Estimated Percentage of Estimated
UUnit starting date construction completion date Present surface Final surface
(month and year) now complete (month and year)
----------------------------------------------------------------------------------------------------------------
1................. February 2010.... 50 December 2010.... Gravel............ Asphalt.
2................. August 2010...... 0 June 2011........ Dirt.............. Do.
[[Page 79520]]
3................. April 2011....... 0 October 2011..... None.............. Do.
----------------------------------------------------------------------------------------------------------------
X. Language for Warning on Cover Page of Property Report--Sec.
1010.105(c)
This Report is prepared and issued by the developer of this
subdivision. It is not prepared or issued by the Federal Government.
Federal law requires that you receive this Report prior to your
signing a contract or agreement to buy or lease a lot in this
subdivision. However, NO FEDERAL AGENCY HAS JUDGED THE MERITS OR VALUE,
IF ANY, OF THIS PROPERTY.
If you received this Report prior to signing a contract or
agreement, you may cancel your contract or agreement by giving notice
to the seller any time before midnight of the seventh day following the
signing of the contract or agreement.
If you did not receive this Report before you signed a contract or
agreement, you may cancel the contract or agreement any time within two
years from the date of signing.
Name of Subdivision----------------------------------------------------
Name of Developer------------------------------------------------------
Date of This Report----------------------------------------------------
XI. Sample Entry in Table of Contents for Statement of Record--Sec.
1010.106(a)
Title and Land Use Page
Method of Sale
Encumbrances, Mortgages and Liens
Recording the Contract and Deed
Payments
Restrictions on the Use of Your Lot
Plat Maps, Zoning, Surveying, Permits and Environment
XII. Required Language for Risks of Buying Land--Sec. 1010.107(a)
(1) The future value of any land is uncertain and dependent upon
many factors. DO NOT expect all land to increase in value.
(2) Any value which your lot may have will be affected if the
roads, utilities and all proposed improvements are not completed. This
paragraph may be omitted if all improvements have been completed or if
no improvements are proposed.
(3) Resale of your lot may be difficult or impossible, since you
may face the competition of our own sales program and local real estate
brokers may not be interested in listing your lot.
(4) Any subdivision will have an impact on the surrounding
environment. Whether or not the impact is adverse and the degree of
impact, will depend on the location, size, planning and extent of
development. Subdivisions which adversely affect the environment may
cause governmental agencies to impose restrictions on the use of the
land. Changes in plant and animal life, air and water quality and noise
levels may affect your use and enjoyment of your lot and your ability
to sell it.
(5) In the purchase of real estate, many technical requirements
must be met to assure that you receive proper title. Since this
purchase involves a major expenditure of money, it is recommended that
you seek professional advice before you obligate yourself.
XIII. Format for General Information--Sec. 1010.108
``This Report covers ---- lots located in ------------ County,
(State ). See Page ---- for a listing of these lots. It is estimated
that this subdivision will eventually contain ---- lots.''
``The developer of this subdivision is:
-----------------------------------------------------------------------
(Developer's Name)
-----------------------------------------------------------------------
(Developer's Address)
-----------------------------------------------------------------------
(Developer's telephone number)
``Answers to questions and information about this subdivision may
be obtained by telephoning the developer at the number listed above.''
XIV. Paragraphs to be included in the General Report--Title to the
Property and Land Use--Sec. 1010.109(a)(1)
``A person with legal title to property generally has the right to
own, use and enjoy the property. A contract to buy a lot may give you
possession but doesn't give you legal title. You won't have legal title
until you receive a valid deed. A restriction or an encumbrance on your
lot, or on the subdivision, could adversely affect your title.''
``Here we will discuss the sales contract you will sign and the
deed you will receive. We will also provide you with information about
any land use restrictions and encumbrances, mortgages, or liens
affecting your lot and some important facts about payments, recording,
and title insurance.''
XV. Statement on Release Provisions--Sec. 1010.109(c)(2)(i)(A)
``The release provisions for the (indicate all or particular lots)
have not been recorded. Therefore, they may not be honored by
subsequent holders of the mortgage. If they are not honored, you may
not be able to obtain clear title to a lot covered by this mortgage
until we have paid the mortgage in full, even if you have paid the full
purchase price of the lot. If we should default on the mortgage prior
to obtaining a release of your lot, you may lose your lot and all
monies paid.''
XVI. Warning for Release Provisions--Sec. 1010.109(c)(2)(i)(C)(1)
``The (state type of encumbrance) on (indicate all or particular
lots) in this subdivision does not contain any provisions for the
release of an individual lot when the full purchase price of the lot
has been paid. Therefore, if your lot is subject to this (state type of
encumbrance), you may not be able to obtain clear title to your lot
until we have paid the (state type of encumbrance) in full, even though
you may have received a deed and paid the full purchase price of the
lot. If we should default on the (state type of encumbrance) prior to
obtaining a release, you may lose your lot and all monies paid.''
XVII. Method and Purpose of Recording Warning--Sec. 1010.109(d)(1)(iv)
``Unless your contract or deed is recorded you may lose your lot
through the claims of subsequent purchasers or subsequent creditors of
anyone having an interest in the land''.
XVIII. Escrow Statement--Disclosure Sec. 1010.109(e)(1)
``You may lose your (indicate deposit, down payment and/or
installment payments) on your lot if we fail to deliver legal title to
you as called for in the contract, because (they are/it is) not held in
an escrow account which fully protects you.''
XIX. Road Chart--Sec. 1010.110(b)(3)
[[Page 79521]]
----------------------------------------------------------------------------------------------------------------
Estimated Percentage of Estimated
UUnit starting date construction now completion date Present surface Final surface
(month/year) complete (month/year)
----------------------------------------------------------------------------------------------------------------
.................
----------------------------------------------------------------------------------------------------------------
XX. Nearby Communities Chart--Sec. 1010.110(b)(6)
Nearby Communities........................................... .........
Population................................................... .........
Distance Over Paved Roads.................................... .........
Distance Over Unpaved Roads.................................. .........
Total......................................................
XXI. Water Chart Form--Sec. 1010.111(a)(1)(ii)(B)
Water
------------------------------------------------------------------------
Estimated
Estimated Percentage of service
UUnit starting date construction now availability
(month and year) complete date (month and
year)
------------------------------------------------------------------------
.................
------------------------------------------------------------------------
XXII. Comfort Station Chart--Sec. 1010.111(b)(1)(ii)
Comfort Stations
Unit-------------------------------------------------------------------
Estimated Starting Date (month-year)-----------------------------------
Percentage of Construction now complete--------------------------------
Estimated Service Availability Date (month and year)-------------------
XXIII. Sewer Chart--Sec. 1010.111(b)(1)(iii)(B)
Sewer
Unit Estimated Starting Date (month/year)------------------------------
Percentage of Construction now complete--------------------------------
Estimated Service Availability Date (month/year)-----------------------
XXIV. Electric Service Chart--Sec. 1010.111(c)(2)
Electric Service
------------------------------------------------------------------------
Estimated
Estimated Percentage of service
UUnit starting date construction availability
(month and year) complete date (month and
year)
------------------------------------------------------------------------
.................
------------------------------------------------------------------------
XXV. Recreational Facility Chart--Sec. 1010.114(b)
----------------------------------------------------------------------------------------------------------------
Estimated date of
Percentage of start of Estimated date Financial Buyer's annual
Facility construction now construction available for use assurance of cost or
complete (month/year) (month/year) completion assessments
----------------------------------------------------------------------------------------------------------------
.................
----------------------------------------------------------------------------------------------------------------
XXVI. Cost Sheet Format--Sec. 1010.117(a)
Cost Sheet
In addition to the purchase price of your lot, there are other
expenditures which must be made.
Listed below are the major costs. There may be other fees for use
of the recreational facilities.
All costs are subject to change.
Sales Price
Cash Price of lot......................... $
Finance Charge............................ $
-----------------------------
Total................................... $
Estimated one-time charges
1. Water connection fee/installation or $
private well.
2. Sewer connection fee/installation of $
private on-site sewer system.
3. Construction costs to extend electric $
and/or telephone services.
4. Other (Identify)....................... $
-----------------------------
$
Total of estimated sales price and one- $
time charges.
Estimated monthly/annual charges, exclusive of utility use fees
1. Taxes--Average unimproved lot after $
sale to purchaser.
2. Dues and assessments................... $
The information contained in this Property Report is an accurate
description of our subdivision and development plans.
-----------------------------------------------------------------------
Signature of Senior Executive Officer
XXVII. Sample Receipt, Agent Certification and Cancellation Page--Sec.
1010.118(a)
Receipt, Agent Certification and Cancellation Page purchaser receipt
Important: Read Carefully
Name of subdivision----------------------------------------------------
ILSRP number-----------------------------------------------------------
Date of report---------------------------------------------------------
We must give you a copy of this Property Report and give you an
opportunity to read it before you sign any contract or agreement. By
signing this receipt, you acknowledge that you have received a copy of
our Property Report.
Received by------------------------------------------------------------
Date-------------------------------------------------------------------
Street address---------------------------------------------------------
City-------------------------------------------------------------------
State------------------------------------------------------------------
Zip--------------------------------------------------------------------
[[Page 79522]]
-----------------------------------------------------------------------
If any representations are made to you which are contrary to those
in this Report, please notify the:
Bureau of Consumer Financial Protection
1700 G Street NW
Washington, DC 20006
Agent Certification
I certify that I have made no representations to the person(s)
receiving this Property Report which are contrary to the information
contained in this Property Report.
Lot--------------------------------------------------------------------
Block------------------------------------------------------------------
Section----------------------------------------------------------------
Name of salesperson----------------------------------------------------
Signature--------------------------------------------------------------
Date-------------------------------------------------------------------
Purchase Cancellation
If you are entitled to cancel your purchase contract, and wish to
do so, you may cancel by personal notice, or in writing. If you cancel
in person or by telephone, it is recommended that you immediately
confirm the cancellation by certified mail. You may use the form below.
Name of subdivision----------------------------------------------------
Date of contract-------------------------------------------------------
This will confirm that I/we wish to cancel our purchase contract.
Purchaser(s) signature-------------------------------------------------
Date-------------------------------------------------------------------
XXVIII. Affirmation of Senior Executive Officer--Sec. 1010.219
I hereby affirm that I am the Senior Executive Officer of the
developer of the lots herein described or will be the Senior Executive
Officer of the developer at the time lots are offered for sale or lease
to the public, or that I am the agent authorized by the Senior
Executive Officer of such developer to complete this statement (if
agent, submit written authorization to act as agent); and,
That the statements contained in this Statement of Record and any
supplement hereto, together with any documents submitted herein, are
full, true, complete, and correct; and,
That the developer is bound to carry out the promises and
obligations set forth in this Statement of Record and Property Report
or I have clearly stated who is or will be responsible; and
That the fees accompanying this submission are in the amount
required by the rules and regulations of the Bureau of Consumer
Financial Protection.
-----------------------------------------------------------------------
(Date)
-----------------------------------------------------------------------
(Signature)
-----------------------------------------------------------------------
(Corporate seal if applicable)
-----------------------------------------------------------------------
(Title)
WARNING: 15 U.S.C. 1717 provides: ``Any person who willfully
violates any of the provisions of this title or of the rules and
regulations or any person who willfully, in a Statement of Record filed
under, or in a Property Report issued pursuant to this title, makes any
untrue statement of a material fact shall upon conviction be fined not
more than $10,000.00 or imprisoned not more than 5 years, or both.''
XXIX. Form for Certification for Disclosure Documents--Sec.
1010.504(a)(2)
The (indicate the State Department of Real Estate or other
appropriate entity) has reviewed the attached materials and finds they
are true copies of (1) the (indicate Property Report or other similar
state accepted document or amendment to such document) for (indicate
the name of the subdivision), made effective by the state of ----------
-- on ------------ (give date) and still in effect; and (2) the
supporting documentation upon which such (indicate the document or
amendment) is based.
-----------------------------------------------------------------------
Signature
XXX. Language to be Included on Property Report Cover Page--Sec.
1010.558(a)(1)
``If you received this Report prior to signing a contract or
agreement, you may cancel your contract or agreement by giving notice
to the seller anytime before midnight of the seventh day following the
signing of the contract or agreement.
``If you did not receive this Report before you signed a contract
or agreement, you may cancel the contract or agreement anytime within
two years from the date of signing.''
XXXI. Notice of Revocation Rights--Sec. 1010.559(a)(1)
You have the option to cancel your contract or agreement of sale by
notice to the seller until midnight of the seventh day following the
signing of the contract or agreement. If you did not receive a Property
Report prepared pursuant to the rules and regulations of the Bureau of
Consumer Financial Protection, in advance of your signing the contract
or agreement, this contract or agreement may be revoked at your option
for two years from the date of signing.
0
2. Add Part 1011 to read as follows:
PART 1011--PURCHASERS' REVOCATION RIGHTS, SALES PRACTICES AND
STANDARDS (REGULATION K)
Subpart A--Purchasers' Revocation Rights
Sec.
1011.1 General.
1011.2 Revocation regardless of registration.
1011.4 Contract requirements and revocation.
1011.5 Reimbursement.
Subpart B--Sales Practices and Standards
1011.10 General.
1011.15 Unlawful sales practices--statutory provisions.
1011.20 Unlawful sales practices--regulatory provisions.
1011.25 Misleading sales practices.
1011.27 Fair housing.
1011.30 Persons to whom subpart B is inapplicable.
Subpart C--Advertising Disclaimers
1011.50 Advertising disclaimers; subdivisions registered and
effective with the Bureau.
Authority: 12 U.S.C. 5512, 5581; 15 U.S.C. 1718.
Subpart A--Purchasers' Revocation Rights
Sec. 1011.1 General.
The purpose of this subpart A is to elaborate on the revocation
rights in 15 U.S.C. 1703, by enumerating certain conditions under which
purchasers may exercise revocation rights. Generally, whenever
revocation rights are available, they apply to promissory notes, as
well as traditional agreements.
Sec. 1011.2 Revocation regardless of registration.
All purchasers have the option to revoke a contract or lease with
regard to a lot not exempt under Sec. Sec. 1010.5 through 1010.11 and
1010.14 until midnight of the seventh day after the day that the
purchaser signs a contract or lease. If a purchaser is entitled to a
longer revocation period under state law, that period is deemed the
Federal revocation period rather than the 7 days, and all contracts and
agreements (including promissory notes) shall so state.
Sec. 1011.4 Contract requirements and revocation.
(a) In accordance with 15 U.S.C. 1703(d)(3), the refund to the
purchaser is calculated by subtracting from the amount described in 15
U.S.C. 1703(d)(3)(B), the greater of:
(1) Fifteen percent of the purchase or lease price of the lot
(excluding interest
[[Page 79523]]
owed) at the time of the default or breach of contract or agreement; or
(2) The amount of damages incurred by the seller or lessor due to
the default or breach of contract.
(b) For the purposes of this section:
Damages incurred by the seller or lessor means actual damages
resulting from the default or breach, as determined by the law of the
jurisdiction governing the contract. However, no damages may be
specified in the contract or agreement, except a liquidated damages
clause not exceeding 15 percent of the purchase price of the lot,
excluding any interest owed.
Purchase price means the cash sales price of the lot shown on the
contract.
(c) The contractual requirements of 15 U.S.C. 1703(d) do not apply
to the sale of a lot for which, within 180 days after the signing of
the sales contract, the purchaser receives a warranty deed or, where
warranty deeds are not commonly used, its equivalent under state law.
Sec. 1011.5 Reimbursement.
If a purchaser exercises rights under 15 U.S.C. 1703(b), (c), or
(d), but cannot reconvey the lot in substantially similar condition,
the developer may subtract from the amount paid by the purchaser, and
otherwise due to the purchaser under 15 U.S.C. 1703, any diminished
value in the lot caused by the acts of the purchaser.
Subpart B--Sales Practices and Standards
Sec. 1011.10 General.
Sales practices means any conduct or advertising by a developer or
its agents to induce a person to buy or lease a lot. This subpart
describes certain unlawful sales practices and provides standards to
illustrate what other sales practices are considered misleading in
light of certain circumstances in which they are made and within the
context of the overall offer and sale or lease.
Sec. 1011.15 Unlawful sales practices--statutory provisions.
The statutory prohibitions against fraudulent or misleading sales
practices are set forth at 15 U.S.C. 1703(a). With respect to the
prohibitions against representing that certain facilities will be
provided or completed unless there is a contractual obligation to do so
by the developer:
(a) The contractual covenant to provide or complete the services or
amenities may be conditioned only upon grounds that are legally
sufficient to establish impossibility of performance in the
jurisdiction where the services or amenities are being provided or
completed;
(b) Contingencies such as acts of God, strikes, or material
shortages are recognized as permissible to defer completion of services
or amenities; and
(c) In creating these contractual obligations developers have the
option of incorporating by reference the Property Report in effect at
the time of the sale or lease. If a developer chooses to incorporate
the Property Report by reference, the effective date of the Property
Report being included by reference must be specified in the contract of
sale or lease.
Sec. 1011.20 Unlawful sales practices--regulatory provisions.
In selling, leasing or offering to sell or lease any lot in a
subdivision it is an unlawful sales practice for any developer or
agent, directly or indirectly, to:
(a) Give the Property Report to a purchaser along with other
materials when done in such a manner so as to conceal the Property
Report from the purchaser.
(b) Give a contract to a purchaser or encourage him to sign
anything before delivery of the Property Report.
(c) Refer to the Property Report or Offering Statement as anything
other than a Property Report or Offering Statement.
(d) Use any misleading practice, device or representation which
would deny a purchaser any cancellation or refund rights or privileges
granted the purchaser by the terms of a contract or any other document
used by the developer as a sales inducement.
(e) Refuse to deliver a Property Report to any person who exhibits
an interest in buying or leasing a lot in the subdivision and requests
a copy of the Property Report.
(f) Use a Property Report, note, contract, deed or other document
prepared in a language other than that in which the sales campaign is
conducted, unless an accurate translation is attached to the document.
(g) Deliberately fail to maintain a sufficient supply of
restrictive covenants and financial statements or to deliver a copy to
a purchaser upon request as required by Sec. Sec. 1010.109(f),
1010.112(d), 1010.209(g), and 1010.212(i).
(h) Use, as a sales inducement, any representation that any lot has
good investment potential or will increase in value unless it can be
established, in writing, that:
(1) Comparable lots or parcels in the subdivision have, in fact,
been resold by their owners on the open market at a profit, or;
(2) There is a factual basis for the represented future increase in
value and the factual basis is certain, and;
(3) The sales price of the offered lot does not already reflect the
anticipated increase in value due to any promised facilities or
amenities. The burden of establishing the relevancy of any comparable
sales and the certainty of the factual basis of the increase in value
shall rest upon the developer.
(i) Represent a lot as a homesite or building lot unless:
(1) Potable water is available at a reasonable cost;
(2) The lot is suitable for a septic tank operation or there is
reasonable assurance that the lot can be served by a central sewage
system;
(3) The lot is legally accessible; and
(4) The lot is free from periodic flooding.
Sec. 1011.25 Misleading sales practices.
Generally, promotional statements or material will be judged on the
basis of the affirmative representations contained therein and the
reasonable inferences to be drawn therefrom, unless the contrary is
affirmatively stated or appears in promotional material, or unless
adequate safeguards have been provided by the seller to reasonably
guarantee the occurrence of the thing inferred. For example, when a lot
is represented as being sold by a warranty deed, the inference is that
the seller can and will convey fee simple title free and clear of all
liens, encumbrances, and defects except those which are disclosed in
writing to the prospective purchaser prior to conveyance. The following
advertising and promotional practices, while not all inclusive, are
considered misleading, and are used to evaluate a developer's or
agent's representations in determining possible violations of the Act
or regulations. In this section ``represent'' carries its common
meaning.
(a) Proposed improvements. References to proposed improvements of
any land unless it is clearly indicated that the improvements are only
proposed or what the completion date is for the proposed improvement.
(b) Off-premises representations. Representing scenes or proposed
improvements other than those in the subdivision unless
(1) It is clearly stated that the scenes or improvements are not
related to the subdivision offered; or
(2) In the case of drawings that the scenes or improvements are
artists' renderings;
(3) If the areas or improvements shown are available to purchasers,
what
[[Page 79524]]
the distance in road miles is to the scenes or improvements
represented.
(c) Land use representations. Representing uses to which the
offered land can be put unless the land can be put to such use without
unreasonable cost to the purchaser and unless no fact or circumstance
exists which would prohibit the immediate use of the land for its
represented use.
(d) Use of ``road'' and ``street.'' Using the words ``road'' or
``street'' unless the type of road surface is disclosed. All roads and
streets shown on subdivision maps are presumed to be of an all-weather
graded gravel quality or higher and are presumed to be traversable by
conventional automobile under all normal weather conditions unless
otherwise shown on the map.
(e) Road access and use. Representing the existence of a road
easement or right-of-way unless the easement or right-of-way is
dedicated to the public, to property owners or to the appropriate
property owners association.
(f) Waterfront property. References to waterfront property, unless
the property being offered actually fronts on a body of water.
Representations which refer to ``canal'' or ``canals'' must state the
specific use to which such canal or canals can be put.
(g) Maps and distances. (1) The use of maps to show proximity to
other communities, unless the maps are drawn to scale and scale
included, or the specific road mileage appears in easily readable
print.
(2) The use of the terms such as ``minutes away,'' ``short
distance,'' ``only miles,'' or ``near'' or similar terms to indicate
distance unless the actual distance in road miles is used in
conjunction with such terms. Road miles will be measured from the
approximate geographical center of the subdivided lands to the
approximate downtown or geographical center of the community.
(h) Lot size. Representation of the size of a lot offered unless
the lot size represented is exclusive of all easements to which the lot
may be subject, except for those for providing utilities to the lot.
(i) ``Free'' lots. Representing lots as ``free'' if the prospective
purchaser is required to give any consideration whatsoever, offering
lots for ``closing costs only'' when the closing costs are
substantially more than customary, or when an additional lot must be
purchased at a higher price.
(j) Pre-development prices. References to pre-development sales at
a lower price because the land has not yet been developed unless there
are plans for development, and reasonable assurance is available that
the plans will be completed.
(k) False reports of lot sales. Repeatedly announcing that lots are
being sold or to make repetitive announcements of the same lot being
sold when in fact this is not the case.
(l) Guaranteed refund. Use of the word ``guarantee'' or phrase
``guaranteed refund'' or similar language implying a money-back
guarantee unless the refund is unconditional.
(m) Discount certificates. The use of discount certificates when in
fact there is no actual price reduction or when a discount certificate
is regularly used.
(n) Lot exchanges. Representations regarding property exchange
privileges unless any applicable conditions are clearly stated.
(o) Resale program. Making any representation that implies that the
developer or agent will resell or repurchase the property being offered
at some future time unless the developer or agent has an ongoing
program for doing so.
(p) Symbols for conditions. The use of asterisks or any other
reference symbol or oral parenthetical expression as a means of
contradicting or substantially changing any previously made statement
or as a means of obscuring material facts.
(q) Proposed public facilities. References to a proposed public
facility unless money has been budgeted for construction of the
facility and is available to the public authority having the
responsibility of construction, or unless disclosure of the existing
facts concerning the public facility is made.
(r) Non-profit or institutional name use. The use of names or trade
styles which imply that the developer is a nonprofit research
organization, public bureau, group, etc., when such is not the case.
Sec. 1011.27 Fair housing.
Title VIII of the Civil Rights Act of 1968, 42 U.S.C. 3601, et
seq., and its implementing regulations and guidelines apply to land
sales transactions to the extent warranted by the facts of the
transaction.
Sec. 1011.30 Persons to whom subpart B is inapplicable.
Newspaper or periodical publishers, job printers, broadcasters, or
telecasters, or any of the employees thereof, are not subject to this
subpart unless the publishers, printers, broadcasters, or telecasters:
(a) Have actual knowledge of the falsity of the advertisement or
(b) Have any interest in the subdivision advertised or
(c) Also serve directly or indirectly as the advertising agent or
agency for the developer.
Subpart C--Advertising Disclaimers
Sec. 1011.50 Advertising disclaimers; subdivisions registered and
effective with the Bureau.
(a) The following disclaimer statement shall be displayed below the
text of all printed material and literature used in connection with the
sale or lease of lots in a subdivision for which an effective Statement
or Record is on file with the Director: ``Obtain the Property Report
required by Federal law and read it before signing anything. No Federal
agency has judged the merits or value, if any, of this property.'' If
the material or literature consists of more than one page, it shall
appear at the bottom of the front page. The disclaimer statement shall
be set in type of at least ten point font.
(b) If the advertising is of a classified type; is not more than
five inches long and not more than one column in print wide, the
disclaimer statement may be set in type of at least six point font.
(c) This disclaimer statement need not appear on billboards, on
normal size matchbook folders or business cards which are used in
advertising nor in advertising of a classified type which is less than
one column in print wide and is less than five inches long.
(d) A developer who is required by any state, or states, to display
an advertising disclaimer in the same location, or one of equal
prominence, as that of the Federal disclaimer, may combine the wording
of the disclaimers. All of the wording of the Federal disclaimer must
be included in the resulting combined disclaimer.
0
3. Add Part 1012 to read as follows:
PART 1012--SPECIAL RULES OF PRACTICE (REGULATION J)
Subpart A--[Reserved]
Subpart B--Filing Assistance
Sec.
1012.30 Scope of this subpart.
1012.35 Prefiling assistance.
1012.40 Processing of filings.
Subpart C--[Reserved]
Subpart D--Adjudicatory Proceedings
1012.105-1012.200 [Reserved]
1012.205 Suspension notice prior to effective date.
1012.210 Hearings--suspension notice prior to effective date.
1012.215 Notice of proceedings subsequent to effective date.
1012.220 Hearings--notice of proceedings subsequent to effective
date.
1012.225 Suspension order for failure to cooperate.
[[Page 79525]]
1012.230 Suspension order pending amendments.
1012.235 Hearings--suspension orders for failure to cooperate and
pending amendments.
1012.236 Notice of proceedings to withdraw a State's certification.
1012.237 Hearings--notice of proceedings pursuant to withdrawal of
state certification.
1012.238 Notices of proceedings to terminate exemptions.
1012.239 Hearings--notice of proceedings pursuant to exemptions.
Authority: 12 U.S.C. 5512, 5581; 15 U.S.C. 1718.
Subpart A--[Reserved]
Subpart B--Filing Assistance
Sec. 1012.30 Scope of this subpart.
This subpart applies to and governs procedures under which
developers may obtain prefiling assistance and be notified of and
permitted to correct deficiencies in the Statement of Record.
Sec. 1012.35 Prefiling assistance.
Persons intending to file with the Bureau of Consumer Financial
Protection, Office of Nonbank Supervision may receive advice of a
general nature as to the preparation of the filing including
information as to proper format to be used and the scope of the items
to be included in the format. Inquiries and requests for informal
discussions with staff members should be directed to the Office of
Nonbank Supervision, Interstate Land Sales Registration Program, Bureau
of Consumer Financial Protection, 1700 G Street NW., Washington, DC
20006.
Sec. 1012.40 Processing of filings.
(a) Statements of Record and accompanying filing fees will be
received on behalf of the Director by the Office of Nonbank
Supervision, for determination of whether the criteria set forth in
paragraphs (a)(1) through (3) of this section have been satisfied.
Where it appears that all three criteria are satisfied and it is
otherwise practicable, acceleration of the effectiveness of the
Statement of Record will normally be granted.
(1) Completeness of the statement
(2) Adequacy of the filing fee, and
(3) Adequacy of disclosure.
(b) Filings intended as Statements of Record but which do not
comply in form with Sec. Sec. 1010.105 and 1010.120 of this chapter,
whichever is applicable, and Statements of Record accompanied by
inadequate filing fees will not be effective to accomplish any purpose
under the Act. At the discretion of the Interstate Land Sales
Registration Program, such filings and any moneys accompanying them may
be immediately returned to the sender or after notification may be held
pending the sender's appropriate response.
(c) Persons filing incomplete or inaccurate Statements of Record
will be notified of the deficiencies therein by the Suspension Notice
procedure described in Sec. 1010.45(a) of this chapter.
Subpart C--[Reserved]
Subpart D--Adjudicatory Proceedings
Sec. Sec. 1012.105-1012.200 [Reserved]
Sec. 1012.205 Suspension notice prior to effective date.
A suspension pursuant to Sec. 1010.45(a) of this chapter shall be
effected by service of a suspension notice which shall contain:
(a) An identification of the filing to which the notice applies.
(b) A specification of the deficiencies of form, disclosure,
accuracy, documentation or fee tender which constitute the grounds
under Sec. 1010.45(a) of this chapter, of the suspension, and of the
additional or corrective procedure, information, documentation, or
tender which will satisfy the Director's requirements.
(c) A notice of the hearing rights of the developer under Sec.
1012.210 and of the procedures for invoking those rights.
(d) A notice that, unless otherwise ordered, the suspension shall
remain in effect until 30 days after the developer cures the specified
deficiencies as required by the notice.
Sec. 1012.210 Hearings--suspension notice prior to effective date.
(a) A developer, upon receipt of a suspension notice issued
pursuant to Sec. 1010.45(a) of this chapter, may obtain a hearing by
filing a written request in accordance with the instructions regarding
such request contained in the suspension notice. Such a request must be
filed within 15 days of receipt of the suspension notice and must be
accompanied by an answer and 3 copies thereof signed by the respondent
or the respondent's attorney conforming to the requirements of
1081.201(b) and (c).
(b) When a hearing is requested pursuant to paragraph (a) of this
section, such hearing shall be held within 20 days of receipt of the
request. The time and place for hearing shall be fixed with due regard
for the public interest and the convenience and necessity of the
parties or their representatives.
(c) A request for hearing filed pursuant to paragraph (a) of this
section shall not interrupt or annul the effectiveness of the
suspension notice, and suspension of the effective date of the
Statement or amendment shall continue until vacated by order of the
Director or administrative law judge. Except in cases in which the
developer shall waive or withdraw the request for such hearing, or
shall fail to pursue the same by appropriate appearance at a hearing
duly scheduled, noticed and convened, the suspended filing shall be
reinstated in the event of failure of the Director to schedule, give
notice of or hold a duly-requested hearing within the time specified in
paragraph (b) of this section, or in the event of a finding that the
Director has failed to support at such hearing the propriety of the
suspension with respect to the material issues of law and fact raised
by the answer. Such reinstatement shall be effective on the date on
which the filing would have become effective had no notice of
suspension been issued with respect to it.
(d) If there is an outstanding suspension notice under Sec.
1010.45(a) with respect to the same matter for which a suspension order
under Sec. 1010.45(b)(3) is issued, the notice and order shall be
consolidated for the purposes of hearing. In the event that allegations
upon which the suspension notice and suspension order are based are
identical, only one answer need be filed.
Sec. 1012.215 Notice of proceedings subsequent to effective date.
A proceeding pursuant to Sec. 1010.45(b)(1) of this chapter is
commenced by issuance and service of a notice which shall contain:
(a) A clear and accurate identification of the filing or filings to
which the notice relates.
(b) A clear and concise statement of material facts, sufficient to
inform the respondent with reasonable definiteness of the statements,
omissions, conduct, circumstances or practices alleged to constitute
the grounds for the proposed suspension order under Sec. 1010.45(b)(1)
of this chapter.
(c) A notice of hearing rights of the developer under Sec.
1012.220 and of the procedures for invoking those rights.
(d) Designation of the administrative law judge appointed to
preside over pre-hearing procedures and over the hearings.
(e) A notice that failure to file an answer conforming to the
requirements of Sec. 1081.201(b) and (c) will result in an order
suspending the Statement of Record.
Sec. 1012.220 Hearings--notice of proceedings subsequent to effective
date.
(a) A developer, upon receipt of a notice of proceedings issued
pursuant to
[[Page 79526]]
Sec. 1010.45(b)(1) of this chapter, may obtain a hearing by filing a
written request in accordance with the instructions regarding such
request contained in the notice of proceedings. Such a request must be
filed within 15 days of receipt of the notice of proceedings and must
be accompanied by an answer conforming to the requirements of Sec.
1081.201(b) and (c).
(b) When a hearing is requested pursuant to paragraph (a) of this
section, such hearing shall be held within 45 days of receipt of the
request by the Director unless it is determined that it is not in the
public interest. The time and place for hearing shall be fixed with due
regard for the public interest and the convenience and necessity of the
parties or their representatives.
(c) Failure to answer within the time allowed by paragraph (a) of
this section or failure of a developer to appear at a hearing duly
scheduled shall result in an appropriate order under Sec.
1010.45(b)(1) of this chapter suspending the statement of record. Such
order shall be effective as of the date of service or receipt.
Sec. 1012.225 Suspension order for failure to cooperate.
A suspension pursuant to Sec. 1010.45(b)(2) of this chapter shall
be effected by service of a suspension order which shall contain:
(a) An identification of the filing to which the order applies.
(b) Bases for issuance of order.
(c) A notice of the hearing rights of the developer under Sec.
1012.235 the procedures for invoking those rights.
(d) A statement that the order shall remain in effect until the
developer has complied with the Director's requirements.
Sec. 1012.230 Suspension order pending amendments.
A suspension pursuant to paragraph (b)(3) of Sec. 1010.45 of this
chapter shall be effected by service of a suspension order which shall
contain:
(a) An identification of the filing to which the order applies.
(b) An identification of the amendment to the filing which
generated the order.
(c) A statement that the issuance of the order is necessary or
appropriate in the public interest or for the protection of purchasers.
(d) A statement that the order shall remain in effect until the
amendment becomes effective.
(e) A notice of the hearing rights of the developer under Sec.
1012.235 and of the procedure for invoking those rights.
Sec. 1012.235 Hearings--suspension orders for failure to cooperate
and pending amendments.
(a) A developer, upon receipt of a suspension order issued pursuant
to Sec. 1010.45(b)(2) or Sec. 1010.45(b)(3) of this chapter, may
obtain a hearing by filing a written request in accordance with the
instructions regarding such request contained in the suspension order.
Such request must be filed within 15 days of receipt of the suspension
order and must be accompanied by an answer and 3 copies thereof signed
by the respondent or respondent's attorney conforming to the
requirements of Sec. 1081.201(b) and (c).
(b) When a hearing is requested pursuant to paragraph (a) of this
section, such hearing shall be held within 20 days of receipt of the
request. The time and place for hearing shall be fixed with due regard
for the public interest and the convenience and necessity of the
parties or their representatives.
(c) A request for hearing filed pursuant to paragraph (a) of this
section shall not interrupt or annul the effectiveness of the
suspension order.
Sec. 1012.236 Notice of proceedings to withdraw a State's
certification.
A proceeding pursuant to Sec. 1010.505 of this chapter is
commenced by issuance and service of a notice which shall contain:
(a) An identification of the state certification to which the
notice applies.
(b) A clear and concise statement of material facts, sufficient to
inform the respondent with reasonable definiteness of the basis for the
Director's determination, pursuant to Sec. 1010.505, that the State's
laws, regulations and the administration thereof, taken as a whole, no
longer meet the requirements of Sec. 1010.501.
(c) A notice of hearing rights of the state under Sec. 1012.237
and of the procedures for invoking those rights.
(d) A notice that failure to file an answer conforming to the
requirements of Sec. 1081.201(b) and (c) will result in an order
suspending the State's certification.
Sec. 1012.237 Hearings--notice of proceedings pursuant to withdrawal
of state certification.
(a) A State, upon receipt of a notice of proceedings issued
pursuant to Sec. 1010.505 of this chapter, may obtain a hearing by
filing a written request in accordance with the instructions regarding
such request contained in the notice of proceedings. Such request must
be filed within 15 days of receipt of the notice of proceedings and
must be accompanied by an answer conforming to the requirements of
Sec. 1081.201(b) and (c).
(b) When a hearing is requested pursuant to paragraph (a) of this
section, such hearing shall be held within 45 days of receipt of this
request. The time and place for the hearing shall be fixed with due
regard for the public interest and the convenience and necessity of the
parties or their representatives.
(c) Failure to answer within the time allowed by paragraph (a) of
this section or failure to appear at a hearing duly scheduled shall
result in an appropriate order under Sec. 1010.505 of this chapter
withdrawing the State's certification. Such order shall be effective as
of the date of service or receipt.
Sec. 1012.238 Notices of proceedings to terminate exemptions.
A proceeding to terminate a self-determining exemption under Sec.
1010.14 or an exemption order under Sec. 1010.15 or Sec. 1010.16 is
commenced by issuance and service of a notice which shall contain:
(a) In the case of an exemption under Sec. 1010.14, an
identification of the developer and subdivision to which this notice
applies. In the case of an exemption under either Sec. 1010.15 or
Sec. 1010.16, an identification of the exemption order to which the
notice applies.
(b) A clear and concise statement of material facts, sufficient to
inform the respondent with reasonable definiteness of the basis for the
Director's determination that further exemption from the registration
and disclosure requirements is not in the public interest or that the
sales or leases do not meet the requirements for exemption, or both.
(c) A notice of hearing rights of the respondent under Sec.
1012.239 and of the procedures for invoking those rights.
(d) A notice that failure to file an answer conforming to the
requirements of Sec. 1081.201(b) and (c) will result, in the case of a
notice issued under Sec. 1010.14, in an order terminating eligibility
for the exemption, or, in the case of a notice issued under either
Sec. 1010.15 or Sec. 1010.16, in an order terminating the exemption
order.
Sec. 1012.239 Hearings--notice of proceedings pursuant to exemptions.
(a) A developer, upon receipt of a notice of proceedings issued
under Sec. Sec. 1010.14, 1010.15, and 1010.16 of this chapter, may
obtain a hearing by filing a written request contained in the notice of
proceedings. The request must be filed within 15 days of receipt of the
notice of proceedings and must be accompanied by an answer conforming
[[Page 79527]]
to the requirements of Sec. 1081.201(b) and (c).
(b) When a hearing is requested pursuant to paragraph (a) of this
section, such hearing shall be held within 45 days of receipt of this
request. The time and place for the hearing shall be fixed with due
regard for the public interest and the convenience and necessity of the
parties of their representatives.
(c) Failure to answer within the time allowed by paragraph (a) of
this section, or failure to appear at a duly scheduled hearing shall
result in an appropriate order under Sec. 1010.14, Sec. 1010.15, or
Sec. 1010.16 of this chapter terminating the developer's exemption.
The order shall be effective as of the date of service or receipt.
Dated: November 29, 2011.
Alastair M. Fitzpayne,
Deputy Chief of Staff and Executive Secretary, Department of the
Treasury.
[FR Doc. 2011-31713 Filed 12-20-11; 8:45 am]
BILLING CODE 4810-AM-P