RP:20- Police power,legal descriptions, subdivided lands act, subdivisions,Land Projects and the Interstate Land Sales Disclosure Act, common int dev, co ops, condos,developers, construction and roof style

Land Projects and the Interstate Land Sales Disclosure Act

A "major" development, or subdivision, describes a land project. A land project is a speculative subdivision development of 50 or more vacant lots that are located in a rural area that has fewer than 1,500 registered voters within 2 miles. Such subdivisions are most often sold only AFTER a very intensive promotional undertaking in those urban areas that tend to be a long distance from the development. To avoid second thoughts or impulse buying, a purchaser of a lot in a land project is allowed a limited amount of time after the SALE to "cool off" and rescind (cancel) the sale, without paying a penalty. The current California regulation allows the purchaser 14 days after the signing of the purchase agreement in which he may rescind his offer and receive a FULL refund. Under the law, any contract to buy or lease land in a land project may be rescinded, IN WRITING, and without cause, within 14 days after the signing of the initial purchase/lease contract. Let's discuss the Interstate Sales Full-Disclosure Act now. This federal law regulates land sales between two or more states. If a developer of 50 or more lots wants to advertise his development in another state or states, he must obtain a public report from the United States Department of Housing and Urban Development (HUD), and then deliver a copy of this report to each prospective buyer. (You might notice that this law is very similar to the California State subdivision regulations.) This law is intended to reduce the fraudulent land sales that tend to take place via mail or out-of-state advertising. Under this law, out-of-state buyers have 7 days after receiving the public report to rescind the contract.

Common Interest Developments

A Common Interest Development, or CID, is a project in which there are common areas used by all tenants, with the exception of separate interests to use as individual living units, and managed by a nonprofit association. There are 4 basic types of common interest ownership, defined as "subdivisions." These are as follows: Planned development (PD); Community apartment project; Condominiums (and time sharing); and Stock cooperatives (also known as "Co-ops"). As you probably remember, we discussed the topics of condos and co-ops in Unit 5. We'll cover the other two - planned developments and community apartment projects - here. A planned development, also known as a planned unit development (PUD), is a subdivision in which the lots are owned separately, but certain areas are owned in common by all owners. A Common Area is the part of the lot or unit in the subdivision that is shared equally by all owners (undivided interest). An undivided interest is the right of any owner to use ANY part of the project. An example of a PUD is a subdivided tract of homes, each on its own lot, that share a tennis court or swimming pool built on a separate lot. (The tennis court or swimming pool is owned in common with the other tract owners.) In this type of subdivision, an owner's association is elected by all of the owners to manage and maintain the common areas of the development. Community Apartment Projects are two or more apartments that are defined as a subdivision, in which the operation, maintenance, and control is usually exercised by the governing board elected by the owners of the individual fractional interests in the subdivision. Each owner receives an undivided interest in the land, along with an exclusive leasehold right to occupy a unit.

Legal Descriptions in the United States

A legal description is NOT THE ADDRESS of the property. This method of describing a parcel of real estate is known as: 1. Lot and Block system. This legal description lists the lot, block, subdivision, county, city, and state. Specifically, this method lists lot and block numbers that refer to a recorded subdivision plat map located in the public records of the county in which the land is located. If a parcel of land is described using this method, it is necessary for there to be a PLAT MAP to locate the parcel. Any question you might see here or on the real test concerning the best example of a "Legal description," based on the " Lot and Block" system, should be answered without including the address of the property. (Lot 12, Block 6, Quiet Village Subdivision, etc.) 2. The Metes and Bounds system is sometimes used to describe irregular pieces of property or in areas where a lot and block system is not in place. A description starts at a designated place on a parcel called a Point of Beginning (POB) and proceeds around the outside of the tract by reference to linear measurements and directions. Monuments are fixed objects used to establish real estate boundaries. A property description using the metes and bounds system must BEGIN AND END at the point of beginning (the same identifiable point). If the description does not meet these guidelines, it is not a valid description. 3. The Rectangular Survey System, sometimes referred to as the government survey system, or Government Rectangular Survey System, is the third method used in describing a parcel of real estate. This system is based on sets of intersecting lines. Principal Meridians run north and south. Base Lines run east and west. Township lines are lines running east and west, parallel with the base line and six miles apart. Range Lines are lines on either side of a principal meridian and are divided into six-mile-wide strips by lines that run north and south parallel to the meridian. A Township is a 36-square-mile area formed by the intersection of a township and range lines. Each township square is divided into 36 Sections, each one mile square. California 's Base Lines and Meridians When accepted by county or city authority, the map is filed in the county recorder's office. Documentation can then describe any lot in the subdivision by indicating the lot number, the block, and the map. The description also includes the name of the city, county, and state. For example: "Lot 14, Block B, Parkview Addition (as recorded July 17, 1956, Book 2, Page 49 of maps), City of Sacramento, County of Sacramento, State of California." As we discussed earlier in this unit, in using the township and section system, we begin with base lines, which are horizontal, and meridians, which are vertical. Regarding land descriptions, we move "townships" (north or south) from a principal base line and "ranges" (east or west) from a principal meridian. California has 3 sets of base lines and meridians: The Humboldt Base Line and Meridian in the northwestern part of the State; The Mt. Diablo Base Line and Meridian in the central part of the State; and The San Bernardino Base Line and Meridian in the southern part of the State.

Condos and Co-ops

Condominiums are the most common type of Planned Development. A condo is the ownership of the land and buildings in common with the other owners, plus the individual ownership of specific "air spaces." Don't confuse the word condo with the term "townhouse;" while a condo is a type of OWNERSHIP, a townhouse is simply a type of building. Condos CAN be used for residential, industrial, or commercial reasons, but in California, the residential condo is the most common. Keep in mind that community apartment project purchasers ONLY have a leasehold interest in the apartment. A Condominium buyer, on the other hand, gets a FEE interest or DEED to his unit. Each condo has a separate grant deed, trust deed, and tax bill. When selling a condominium, the seller must give a copy of the following documents: (1) The CC&Rs; (2) the governing laws, known as the by-laws, of the association; and (3) the condo association's most recent financial statement. Remember that Timesharing is a form of ownership in which each of the investors holds a specific unit (or home) and owns the right to occupy that home for a specified period each year. There can be 52 holders who each own a specific one-week share in one unit at a resort property. A Stock Cooperative (better known as a cooperative or co-op) is a CORPORATION formed to own the land and improved real property, that either owns OR leases real property. The buyer does NOT receive a grant deed, but DOES own a share of the corporation, and the right to occupy a specific unit. This "right to occupy" CAN be conveyed ONLY with the share of stock in that corporation.

Police Power

Earlier in this course, we explored the topic of police power. Police power is the constitutional right of the government to regulate private activity to promote the general safety, health, and welfare of society. As we discussed earlier, police power includes such things as zoning, health codes, building codes, set-back requirements, and environmental regulations. Police power also allows the government the power to regulate private land use WITHOUT being compensated. Eminent domain gives the government the power to acquire the title to private land for public use, in exchange for a PAYMENT of "just compensation," as we discussed earlier in this course. Through eminent domain, the state may acquire land for streets, parks, public buildings, public rights-of-way, and similar uses. No private property is exempt from this exercise of government power. Now it's time to focus on another way in which police power is used in the United States - to control and direct land use regarding subdivisions. Subdivision regulation will be our focus for much of this unit.

Developers and Subdividers in California

The Difference Between a Developer and a Subdivider: This could be one and the same person doing both jobs; however, you must know the difference between the two. A developer is one who attempts to put land to its most profitable use through the construction of improvements, such as commercial condominiums or subdivision projects. A subdivider is an owner whose land is divided into two or more lots and offered for disposition. A subdivider must understand the potential difficulties involved in subdividing and the market for each project. The subdivider's development plan must take into account all state and local government regulations, including the Subdivided Lands Law, the Subdivision Map Act, the California Environmental Quality Act, zoning, and local general and specific plans. As you probably know, real estate developers tend to function in a larger business "arena" than real estate brokers. Developers "manufacture" residential, commercial, or industrial sites, either as vacant lot subdivisions or as improved or partially improved subdivisions. The goal of a developer is to supply the type and price range of product that will satisfy the market, but the ways in which they achieve their goals vary between individuals.

Subdivided Lands Act

The Subdivided Lands Act is a law that was designed to protect the purchasers of property in new subdivisions from fraud of misrepresentation when these purchasers are buying subdivided land. Keep in mind that under the Subdivided Lands Act, a subdivision is defined as a division of land into 5 or more lots for the purpose of selling, leasing, or financing, whether now or in the future. (Do not confuse this with the previously discussed Subdivision Map Act, in which subdivisions are defined as having 2 or more lots.) The Subdivided Lands Act is primarily concerned with any marketing aspects of a subdivision, and is administered by the California Real Estate Commissioner. Under this act, a new subdivision of 5 or more lots may NOT be offered for sale until the Real Estate Commissioner issues a public report for the subdivision. The Commissioner will not issue the public report until he is certain that the developer has met all statutory requirements - including, in particular, those financial arrangements established to assure completion of any promised subdivision facilities. Remember that the public report is simply a statement by the Commissioner that the subdivider has followed all applicable laws and regulations - it is NOT the Commissioner's recommendation or endorsement of the development. Before each lot in a new subdivision may be sold, the subdivider must deliver a copy of the Commissioner's public report to the prospective buyer, who must then sign a statement attesting that he has read the public report. This statement must be kept on file by the subdivider for 3 years. It is ONLY after ALL of the preceding steps have been completed that the subdivider can sell each lot. The public report is valid for 5 years. Should a material change in the subdivision occur, then an amended public report must be issued by the Commissioner. Such material changes could include contract forms, the sale of 5 or more lots to a single buyer, or physical changes, such as lot or street lines. Remember that the entire public report process only applies to the first sale of each lot in a new subdivision. When a lot is resold, there is no need for the subsequent buyer(s) to receive a public report. In some cases, the Commissioner might issue a preliminary public report. A preliminary public report gives the subdivider the opportunity to take reservations for a purchase, pending the approval and issuance of a public report. If the prospective buyer decides not to buy a property he's reserved, he is NOT committed simply because he made a reservation. The buyer can legally back out of the reservation and receive a FULL refund, up until the time that the final report is issued and a binding purchase agreement is signed.

Additional Subdivision Notes

The following regulations also apply to subdivisions: Subdivided land projects that are located in another state, even though they are offered for sale in California, do NOT need to have a public report from the Commissioner or BRE. Out-of-state subdividers must simply include certain disclosures in both advertising and sales agreements. Any foreign properties that are offered for sale in California are considered "buyer-beware" situations, because there are very few restrictions placed on them. Any Californian who considers purchasing property that is out of the state OR out of the country should always seek legal advice before entering into any sales agreement. Keep in mind that a subdivision project is not one to be entered into lightly, since the process requires a great deal of time AND money. In fact, the average subdivision takes months to process, while a MAJOR development can take years. ANY advertising and promotions by subdividers MUST follow the DRE's guidelines. One such requirement is that the public report must be given to each advertising media selected by the subdividers. Another subdivision advertising mandate is that a TRUE COPY of ANY advertising material proposed for use for a land project offering must be submitted as part of the documentation required BEFORE the public report is issued.

California Subdivision Laws

The two basic California subdivision laws are the Subdivision Map Act, found in the Government Code, Sections 66410, et seq., and the Subdivided Lands Act, found in the Business and Professions Code, Sections 11000 - 11200. It is necessary for every licensee applicant to be familiar with the extent and purpose of the Commissioner's jurisdiction over the sale or lease of newly subdivided land. At some point in a California licensee's real estate career, he will usually end up working with the sale of subdivided property or called on for advice in preparing a subdivision for the market. The term "subdivision" includes all of the following: A condominium project, a community apartment project, or the conversion of five or more existing dwelling units to a stock cooperative. You should know that there are times when a principal is creating a subdivision without realizing it. It is up to the broker not only to recognize such an act, but also to be knowledgeable about the subdivision laws so that the principal does not inadvertently violate the law. When selling subdivided property, the broker must make certain that two important requirements of the subdivision law are followed. First, the broker must furnish the prospective buyer with a copy of the subdivision public report, obtain a receipt, and give the prospective buyer an opportunity to read the report before the prospect makes an offer to purchase. Second, it is the broker's responsibility to handle any deposit or purchase monies as described under California law. The Subdivision Map Act is a law that requires the mapping of all new subdivisions. This act regulates the DIVISION of 2 or more lots for the purpose of selling, leasing, or financing said lots, either at that time or in the future. The map shows the relationship of the subdivision to other lands, and each parcel in the subdivision is delineated and identified. The Subdivision Map Act is administered by LOCAL OFFICIALS, and focuses on the PHYSICAL aspects of a subdivision, including: The streets; The design of the subdivision; The sewers; and Other details that fall into the "physical aspects" category. In addition to addressing the specific physical mandates for a subdivision, the Subdivision Map Act also outlines the procedure that must be used to file subdivision maps that result in the LEGAL creation of a subdivision.

Roof and Architectural Styles in California

There are MANY different roof and architectural styles of homes in California . We will briefly list some of these styles here. (Keep in mind that this is NOT a comprehensive list of styles.) Roof Styles: Victorian roof; Gable roof; Hip roof; Mansard (French-style) roof; Pyramid roof; Shed roof; and Gambrel roof (used on barns and Dutch Colonial homes). Architectural Styles: New England Colonial; Georgian Colonial; Southern Colonial; California Bungalow; California Ranch; Spanish; Cape Cod; Victorian; French Norman ; French Provincial; English Tudor; and Monterey

Home Construction Styles

While there are several types of home construction styles, there are 3 varieties that are most common: The one-story home, which is the easiest to build and maintain, but occupies more land per square foot of living space than the other styles; The split-level home, which is very popular in California because this style not only better utilizes the land where there is varying topography, but is also aesthetically pleasing. This style is more expensive to construct, though; and The two-story home, which contains a single foundation and roof that supports two floors of living area. Because of this style, there is a lower cost per square foot. The "downside" to a 2-story home is that stairs must be used to reach the second floor, and the height of the structure is more difficult to reach for repair and maintenance issues.