subdivision industry bulletin · the full cost for optional extras from the purchaser and use that...

SUBDIVISION INDUSTRY BULLETINSummer 2002

Department of Real Estate

Gray Davis, GovernorMaria Contreras-Sweet, Secretary, Business, Transportation, & Housing AgencyPaula Reddish Zinnemann, Real Estate Commissioner

New pet rules

Effective January 1, 2001, AB 860 amended Civil Code Section798.33 (Mobilehome Residency Law) and added Civil Code Sec-tion 1360.5 (Davis-Stirling).

The Mobilehome Residency Law regulates the manage-ment of mobilehome parks, in terms of the rules andregulations imposed on the residents of such projects,including rules set forth relating to the keeping of pets.The amendment to Civil Code Section 798.33 providesthat no mobilehome park lease agreement entered into,modified, or renewed on or after January 1, 2001, shallprohibit an owner from keeping at least one pet (subject to reasonable rulesand regulations of the project).

The Davis-Stirling Common Interest Development Act contains certainrequirements relating to the governing documents for common interestdevelopments. Civil Code Section 1360.5 was added to provide that nogoverning documents entered into, amended, or otherwise modified on orafter January 1, 2001, shall prohibit an owner of a separate interest withina common interest development from keeping at least one pet.

The new statutes identify which pets can be kept, but do not includelanguage pertaining to the size or weight of a pet. The governingdocuments may impose reasonable restrictions on the size or weight of apet.

Any person filing an application with the Department of Real Estate for acommon interest subdivision should be aware that all governing docu-ments (including bylaws), and all mobilehome park lease agreements filedwith the project must now comply with these requirements.

Money paid for optional extras subject to impound laws

Optional extras are frequentlyordered by subdivisionhomebuyers. Sometimes

the specially-installed items may costthousands of dollars and once in-stalled, cannot be removed withoutadditional expense.A problem arises when a buyer failsto complete the transaction and theproperty, improved to their specifi-cations, cannot be sold to anotherbuyer for a sufficient amount torecapture the subdivider’s additionalcosts.In an attempt to forestall problemsof this type, some developers extractthe full cost for optional extras fromthe purchaser and use that money toinstall the requested improvements.Also, the monies paid by the pur-chaser for the optional extras arefrequently deposited in an account,other than the designated purchasemoney impound account. Subdi-viders who use purchase money inthis fashion act in violation of theSubdivided Lands Law.Under the Subdivided Lands Law,all monies received from a purchasertowards the purchase or a long termlease of subdivided property is pur-chase money. Subdividers are pre-cluded from using purchase moneyfor any purpose until the purchaserreceives title to the property, orwhatever other interest for whichhe/she contracted. This means thatthe subdivider-builder must usuallyinstall all such extras with his/herown funds and if there is a default bya purchaser, the subdivider may thenlay claim to funds expended for ex-tras under the liquidated damagesprovisions of the contract. The pro-cedures for making a claim againstpurchase money must be in accor-dance with Section 2791 of the

Regulations of the Real Estate Com-missioner.Instead of using his/her own moneyto install the extras the subdividercan use purchase money by furnish-ing a bond to the Department ofReal Estate under the provisions ofSection 11013.2(c) or 11013.4(b)of the Business and ProfessionsCode. The bond could be for thetotal amount intended to be usedfor these special installations or forall the purchase monies the subdi-vider believes he may expend for anyreason. If such a bond (RE 600 or

600A) is furnished the subdividermay still be liable to the purchaserfor purchase monies expended if acourt or arbitrator determines thatthe subdivider is not entitled to theliquidated damages he is claiming.If purchasers contract separately withcontractors or suppliers who are inno way associated with a subdividerand these contractors are paid sepa-rately by the purchaser for extras,the amounts paid are not consideredto be monies paid for the purchaseor lease of a subdivision interest and

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��Our dear friend and colleague Joyce Bloomer passed away Saturday,January 26, 2002. Joyce began her career at the Department of Real Estatein 1980 in the Appraisal Section as an Assistant Property Appraiser. She waspromoted in 1984 to Associate Property Appraiser. At the journeymanlevel, Joyce excelled at appraising properties within and outside of Califor-nia and completing the most complex filings. Joyce was promoted to SeniorDeputy Commissioner in August 2001. She will be missed.

New water supply requirements

Effective January 1, 2002, SB221 amended Section 11010of the Business and Profes-

sions Code and Section 65867.5 ofthe Government Code. It also addedSections 66455.3 and 66473.7 tothe Government Code. The Gov-ernment Code sections became apart of the Subdivision Map Act.

The Subdivision Map Act requiresthe legislative body of a city or countyto deny approval of a tentative map,if such legislative body makes a find-ing that the map is not in conform-ance with the general and specificplans of the city or county. Theavailability of a sufficient water sup-ply is one of the factors used inmaking this finding.

Sections 66473.7 and 65867.5 re-spectively, prohibit the approval of atentative map or development agree-ment for a subdivision of 500 ormore units, unless the tentative mapor agreement complies with addedGovernment Code Section66473.7.

Compliance with GovernmentCode Section 66473.7 men-tioned above, includes ob-taining written verificationfrom the applicable water sup-plier that an adequate watersupply is available, or will beavailable prior to completionof the project.

Section 11010 of theBusiness and ProfessionsCode requires persons

intending to offer non-exempt sub-divided lands in the State of Califor-nia to file an application with theDepartment of Real Estate, and toprovide a true statement of any pro-visions that have been made for thesupply of water to the subdivision.As amended, Section 11010 requiressubdividers to demonstrate wateravailability (in subdivisions contain-ing more than 500 dwelling units)by submitting written verification ofsuch availability obtained pursuantto Government Code Section66473.7.

Section 66473.7(i) indicates thatthe new requirement does not applyto any residential project proposedfor a site that is within an urbanizedarea and has been previously devel-oped for urban uses; or where theimmediate contiguous propertiessurrounding the residential projectsite are, or previously have been,developed for urban uses; or hous-ing projects that are exclusively forvery low and low-income house-holds.

Under Business and Profes-sions Code Sections11010(b)(6) and 11018(f),the Department of RealEstate already has the re-quirement of demonstrat-ing water availability prior

to obtaining a publicreport. The amend-ments discussedhere provide anadditional way for

this requirement to be met. It shouldbe noted that these changes onlyaddress the availability of water forsubdivisions of 500 or more units,and have nothing to do with finan-cial arrangements for the water de-livery system, such as installation ofwater lines.

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Senior housing

Senate Bill 2011, signed into law in September 2000, became operativeJuly 1, 2001. The legislation amended Section 11010.05 of theBusiness and Professions Code and Sections 51.2, 51.3, 51.4, 51.11

and 51.12 of the Civil Code. The legislation revised the definition for a“senior citizen housing development” and created new requirementsaffecting the public report process as follows:� In all counties except the County of Riverside*, “senior citizen housing

development” means a residential development developed, substan-tially rehabilitated, or renovated, for senior citizens that has at least 35dwelling lots/units. *In Riverside County, a “senior citizen housingdevelopment” has 20 lots/units or more.

� Any person proposing a “senior citizen housing development” mustinclude in an application for a public report a complete statement ofrestrictions on occupancy to be applicable in the development.

� Any public report issued for a “senior citizen housing development”must contain a statement of restrictions on occupancy to be applicablein the development.

The DRE expects any effect on the public report process resulting from thenew requirements to be minimal. Typically, a statement of restrictions onoccupancy applicable to a development is derived from language containedin the development’s CC&Rs. The DRE will utilize the statement providedby the applicant and will possibly reference language in the CC&Rs whenpreparing special notes for the public report. Depending on the statementprovided by the subdivider, the new special note may resemble the existingnote for age restricted projects in the Worksheet-Additional Special Notes(RE 622C).

Subdivisions NorthIndustry typed public reports

The following are guidelinesfor processing and preparinga pre-typed subdivision pub-

lic report:� You will need compatible equip-

ment to create an IBM format-ted diskette that can be used bythe Deputy to make corrections,changes or deletions and also betransferred to one of our dis-kettes creating a record to beused in the future. Your diskettewill be returned once data hasbeen transferred into our data-base. The Department preparespublic reports on personal com-puters with Microsoft® Word.Our standard font is: 12-pointArial. If you have any questionsabout formatting, please con-tact our word processing techni-cian, Denise White, in Sacra-mento.

� Submit the pre-typed subdivi-sion public report as early in theprocess as possible. This can helpavoid time consuming changesat the final document stage.

� Contact the Deputy to deter-mine their processing proce-dures. This may include the useof their worksheet.

� Keep current worksheets onhand. In cases of subsequentphases, you may want to use thesubdivision public report for theprior phase as a worksheet. Sub-mit a copy of the pro formareport highlighted so the Deputycan easily identify all the changes.Use the same procedure foramendments.

� Remember the more you be-come familiar with the formatfor typing the reports, the easier

Personnel changes�� Ron Southard transferred from theLos Angeles Subdivision Section tothe Sacramento Subdivision Sectionin August 2001. Ron is splitting histime between budget reviews andsubdivision reviews.

Mary Libra was promoted to SeniorDeputy Commissioner in May 2002.Mary will assist Lou Hauger in train-ing new or inexperienced Deputiesin the Budget Review Section.

Shannon Boyd was promoted toDeputy Commissioner in May 2002.In addition to her duties as a DeputyCommissioner, Shannon will be theliaison between the InformationSystem Section and the SubdivisionSection.

�� Angele Eskandari was hired as aDeputy Commissioner in Novem-ber 2001. Angele was an indepen-dent real estate broker for the pasteight years. She has been in the realestate and loan brokerage industryfor more than twelve years.

this task becomes. The subdivi-sion public report is still theresponsibility of the Deputy andthe Deputy can make anychanges he/she deems neces-sary.

� If the SRP requests that the sub-division public report be deliv-ered in a manner other than theregular mail service, please pro-vide instructions. If you will beusing a delivery service such as,FedEx®, DHL Worldwide Ex-press®, etc., please include a self-addressed envelope with the ap-propriate account number.

The cooperation of industry andDRE staff, will help reduce time andstress and ensure reports are issuedwithin reasonable time frames.

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Notice ofabandonment

Have you recently received aFile Abandonment Noticefrom the Department?

Commissioner’s Regulation 2804(a)states that the Commissioner mayabandon an application for a final,conditional, amended, or renewedpublic report, if:

(1) The data required by Section11010 has not been furnishedwithin three years from the datea notice of intention was filedfor the subdivision public re-port; and

(2) Six months have elapsed sincethe commissioner has given no-tice of deficiencies or substan-tive inadequacies contained inthe documents which are re-quired to make the filing sub-stantially complete and the defi-ciencies and inadequacies havenot been corrected by the appli-cant; and

(3) The term of any one-year exten-sion of time in which to com-plete the application, as providedin subdivision (d), has elapsed.

�� You will receive two file abandon-ment notices from the Departmentprior to abandoning your file. Thefirst notice [Regulation 2804(c)]will be mailed 90 days prior to aban-doning the file. The second andfinal notice [Regulation 2804(d)]will be mailed 60 days or more fol-lowing the mailing of the first no-tice. Your file will be deemed aban-doned 30 days after the final noticeis mailed, unless prior to the 30 dayperiod, the filing is completed or aone-year extension has been grantedpursuant to subdivision (d) of Regu-lation 2804.

�� If you wish to keep your file active,you must file a petition with theDepartment no later than 30 daysafter the final notice has been mailed.Subdivision (d) of Regulation 2804

New property inspection law

Effective January 2, 2002, Section 11010.11 was added to theBusiness & Professions Code by AB 452. The new law requiresthe Department of Real Estate to add a disclosure to the

subdivision public report informing a purchaser of the right tonegotiate property inspections with the seller under terms mutuallyagreeable to both parties.

The intent of the new statute is to advise the purchaser of the right tonegotiate for a property inspection in residential transactions. Thelegislation did not intend that the Department would review or requirethe disclosure be added to the governing documents or the purchaseagreement. As of January 1, 2002, the following special note must beincluded at the end of the special notes section of the subdivisionpublic report:

NOTWITHSTANDING ANY PROVISION IN THE PUR-CHASE CONTRACT TO THE CONTRARY, A PROSPEC-TIVE BUYER HAS THE RIGHT TO NEGOTIATE WITHTHE SELLER TO ALLOW AN INSPECTION OF THEPROPERTY BY THE BUYER OR THE BUYER’S DESIG-NEE UNDER TERMS MUTUALLY AGREEABLE TO THEPROSPECTIVE BUYER AND SELLER.

states that the commissioner, on herown motion, or after receipt of apetition from the applicant or theapplicant’s designated representa-tive, may, under the following termsand conditions, grant a one-yearextension in order to allow the ap-plicant to complete the application:

(1) The petition is received prior tothe expiration of the thirty (30)day notice period referred to insubdivision (c).

(2) The petition sets forth reasonsof hardship or justifiable extenu-ating circumstances explainingwhy the file has been inactive.Hardship and justifiable extenu-ating circumstances shall includemistake, inadvertence, surprise,excusable neglect, or circum-stances beyond the control ofthe applicant or the applicant’sdesignated representative.

Written notice of the decision togrant or deny the petition will bemailed or delivered to the applicantand the applicant’s designated rep-resentative, within thirty (30) calen-dar days after receipt of the petition.

Regulation 2804(e) also states the

commissioner may grant one or moreone-year extensions, provided thatthe application has not been aban-doned as provided in subdivision (c)of Regulation 2804.

Remember, your petition to keepyour file open must be receivedwithin 30 days after the final noticeis mailed. Once the file has beenformally abandoned, a new applica-tion and filing fee will be required toproceed in the future.

are exempt from the impound pro-visions of the Business and Profes-sions Code. Because many subdi-vider-builders object to work beingperformed on their property at thisstage of development by indepen-dent contractors outside thebuilder’s control, this procedure isnot widely used.

Feedback from subdividers who haveused the bonding procedures indi-cate that it is the most acceptableand practical procedure.

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DEPARTMENT OF REAL ESTATE

SUBDIVISIONS

HOW TO CALCULATE INITIAL FILING FEES

COMMON INTEREST SUBDIVISION ORTIME-SHARE SINGLE-SITE FILING

$ 1650 Final public report basic fee PLUS

$ 10 Per interest (time-share fees based on maxallowable intervals per unit, i.e., biennial sales)

$ 500 Additional fee for preliminary public report(not available for out-of-state filings)

Example: Common interest subdivision with 60 units

$ 1650 Basic fee+ $ 600 $10 per interest fee= $ 2250 Total without a preliminary public re-

port+ $ 500 Preliminary public report fee= $ 2750 Total with a preliminary public report

STANDARD SUBDIVISION

$ 550 Final public report basic fee PLUS

$ 10 Per interest

$ 500 Additional fee for preliminary public report

Example: Standard subdivision with 120 lots

$ 550 Basic fee+ $ 1200 $10 per interest fee= $ 1750 Total without a preliminary public re-

port+ $ 500 Preliminary public report fee= $ 2250 Total with a preliminary public report

STATE OF CALIFORNIA

SUBDIVISION FILING FEES

RE 605 (Rev. 7/01)

FILING FEES

Maximum Fees• Standard Subdivision — $4,100 is

the maximum fee for a final subdi-vision public report.

• Common Interest Subdivision orIn-State Time-Share Filing —$7,600 is the maximum fee for afinal subdivision public report.

• Out-of-State Time-Share Filing —$7,500 is the maximum fee for anout-of-state permit.

Multiple Map/Phased ProjectIf you are applying for an overall pre-liminary public report for a multiplemap or phased project, all interest fees(lots/units) must be included with the(initial) basic filing fee. (Not applicableto time-share or out-of-state.)You will only be required to pay thebasic filing fee as you submit subse-quent phases.

Payment MethodsSubmit a cashier's check, money orderor check payable to Department of RealEstate. Do not send cash.Refer to Credit Card Payment (RE 909)for credit card payment information.Attach and submit the filing fee or RE909 with a photocopy of page 1 of theapplication.

Basic Fees:$ 550 • Standard subdivision$ 1650 • Common interest subdivision$ 1650 • Time-share filings (in- and out-of-state)$ 100 • Out-of-state registrations

Preliminary/Interim Public Report Fees:$ 500 • Original/amended$ 450 • Renewal

Conditional Public Report/Permit Fee$ 500 • Original/amended$ 450 • Renewal

Amendment Fees:$ 400 • Standard$ 400 • Common interest subdivision$ 400 • Time-share filings (in- and out-of-state)$ 100 • Out-of-state registrations$ 125 • Subdivider Name Change Only (Additional applications

submitted concurrently — $60 each)

Renewal Fees:$ 550 • Standard$ 550 • Common interest subdivision$ 550 • Time-share filings (in- and out-of-state)$ 100 • Out-of-state registrations

$ 150 Filing fee for Notice of Intention without a completed subdi-vision questionnaire. [Business and Professions Code§11011(b)(1)]

$ 20 Filing fee for Application to Amend Documents. [Business andProfessions Code §11018.7]

$ 10 Interest Fees (per lot, unit or interest; does not apply to out-of-state registrations)

Location 1 Calculation$ 1,650 Basic fee$ 6,120 612 intervals (12 units)$ 7,770 over maximum; use $7500$ 7,500 Maximum fee

Location 2 Calculation$ 1,650 Basic fee$ 1,530 153 intervals (3 units)$ 3,180 Total for location 2

Location 3 Calculation$ 1,650 Basic fee$ 5,100 510 intervals (10 units)$ 6,750 Total for location 3

Final Calculations$ 7,500 For location 1$ 3,180 For location 2$ 6,750 For location 3$17,430 Total fee

OUT-OF-STATE TIME-SHARE MULTI-SITE FILING FEES — Based on 7/01 FeesRE 605 — Reverse

HOW TO CALCULATE MULTI-SITE FILING FEES — Based on 7/01 Fees

Note: Examples are based on sales of 51 weeks per year per unit.

Fees for Existing Locations$ 7,140 Addition of 714 intervals

(14 units) to location 1$ 8,160 Addition of 816 intervals

(16 units) to location 2;over maximum fee, use$7500

$ 7,500 Maximum fee for loc. 2$ 400 Amendment fee

Final Calculations$ 7,140 For existing location 1$ 7,500 For existing location 2$ 400 Amendment fee$15,040 Total fee

Fees for Existing Locations$ 510 Addition of 51 intervals (1

unit) to location 1$ 3570 Addition of 357 intervals

(7 units) to location 2$ 7,140 Addition of 714 intervals

(14 units) to location 3$ 400 Amendment fee

Fees for New Location$ 1,650 Basic fee for new location$ 6,120 612 intervals (12 units)$ 7,770 over maximum; use $7500$ 7,500 Maximum fee

Final Calculations$ 510 For existing location 1$ 3,570 For existing location 2$ 7,140 For existing location 3$ 400 Amendment fee$ 7,500 Maximum fee for

new location$19,120 Total fee

EXAMPLE 1

Time-share filing with 3 locations

EXAMPLE 2

Amendment adding units to 3 existinglocations and adding 1 new location.

EXAMPLE 3

Amendment adding units to 2 existinglocations.

Maximum Fees

$7500 per location per each original, amendment, or renewalapplication. The $400 amendment (or $550 renewal fee, asapplicable) will be waived in the amount excess of themaximum fee.

Only one amendment/renewal fee is necessary when addingunits to multiple, previously approved locations.

$1,650 Basic fee per each location plus $10 per interval.Interval fee based on maximum allowable inter-vals per unit, e.g. biennial sales.

$ 550 Renewal fee

$ 400 Amendment fee

$ 10 Per interval when adding units to existing loca-tions.

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PUBLICATION INFORMATION — PLEASE READ BEFORE ORDERING.

PART B PURCHASER INFORMATION

TO PURCHASE PUBLICATION(S) BY CREDIT CARD, COMPLETE THE FOLLOWING:

METHOD OF PAYMENT ACCOUNT NUMBER EXPIRATION DATE OF CARD AMOUNT AUTHORIZED

VISA MASTERCARD $

SIGNATURE OF CARDHOLDER DATE APPROVAL # — DRE USE ONLY

»PRINTED NAME OF CARDHOLDER TELEPHONE NUMBER REFERENCE # — DRE USE ONLY

Subtotal _______

– Discount _______

Subtotal _______

+ CA Tax* _______(Tax rate used* _______%)

TOTAL $_______

STATE OF CALIFORNIA — DEPARTMENT OF REAL ESTATE

PUBLICATIONS REQUEST

RE 350 (Rev. 6/02)

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NAME OF PURCHASER — TYPE OR PRINT CLEARLY IN INK

STREET ADDRESS OR POST OFFICE BOX

CITY STATE ZIP CODE

*See reverse for tax information.

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PART C CREDIT CARD INFORMATION

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INSTRUCTIONS

To order subdivision forms, complete and return this form to oneof the addresses listed below.

Mail to:

DEPARTMENT OF REAL ESTATE

SUBDIVISIONS

STATE OF CALIFORNIA

SUBDIVISION FORMS REQUEST

RE 695C (Rev. 7/99)

The Department of Real Estate does not discriminate on the basis of race, color, creed, national origin, ancestry, sex,marital status, religion, age, sexual orientation or disability in employment or the provision of services.

RE ________ RE ________ RE ________ RE ________

RE ________ RE ________ RE ________ RE ________

RE ________ RE ________ RE ________ RE ________

RE ________ RE ________ RE ________ RE ________

RE ________ RE ________ RE ________ RE ________

RE ________ RE ________ RE ________ RE ________

RE ________ RE ________ RE ________ RE ________

RE ________ RE ________ RE ________ RE ________

RE ________ RE ________ RE ________ RE ________

RE ________ RE ________ RE ________ RE ________

RE ________ RE ________ RE ________ RE ________

REQUESTOR'S STATEMENT

SIGNATURE OF REQUESTOR DATE

»

NAME OF REQUESTOR (PRINT OR TYPE) TITLE OF REQUESTOR

COMPANY NAME TELEPHONE NUMBER (INCLUDE AREA CODE)

MAILING ADDRESS (STREET ADDRESS OR P.O. BOX, CITY, STATE, AND ZIP CODE)

I understand that I may reproduce additional copies on paper of comparable quality andsimilar color so long as the forms are not altered in any way.

Note:

• Please enclose a preprinted address label with your request.

• You will receive one copy of each requested form by mail.You may reproduce additional copies on paper of comparablequality and similar color provided you do not alter the formsin any way.

Department of Real EstateSubdivisions – NorthP.O. Box 187005Sacramento, CA 95818-7005

Department of Real EstateSubdivisions – South320 W. 4th Street, Suite 350Los Angeles, CA 90013-1105

Preliminary

Standard

Common Interest

Amendment/Renewal

Stock Cooperative/Limited Equity Hous-ing Cooperative

Time Share (in-state and out-of-state)

Time Share - Amendment/Renewal (in-stateand out-of-state)

Undivided Interest

Out-of-state Registration (covers all excepttime-shares)

Subdivision Packets (Check one or more) Individual Subdivision Forms (one each)

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