[Title 24 CFR X]
[Code of Federal Regulations (annual edition) - May 1, 2001 Edition]
[Title 24 - HOUSING AND URBAN DEVELOPMENT]
[Chapter X - OFFICE OF ASSISTANT SECRETARY FOR HOUSING--FEDERAL HOUSING]
[From the U.S. Government Printing Office]


24HOUSING AND URBAN DEVELOPMENT52001-05-012001-05-01falseOFFICE OF ASSISTANT SECRETARY FOR HOUSING--FEDERAL HOUSINGXCHAPTER XHOUSING AND URBAN DEVELOPMENT
 CHAPTER X--OFFICE OF ASSISTANT SECRETARY FOR HOUSING--FEDERAL HOUSING 
 COMMISSIONER, DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT (INTERSTATE 
                    LAND SALES REGISTRATION PROGRAM)




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Part                                                                Page
1710            Land registration...........................           7
1715            Purchasers' revocation rights, sales 
                    practices and standards.................          65
1720            Formal procedures and rules of practice.....          69

[[Page 7]]



PART 1710--LAND REGISTRATION--Table of Contents




                     Subpart A--General Requirements

Sec.
1710.1  Definitions.
1710.3  General applicability.
1710.4  Exemptions--general.
1710.5  Statutory exemptions from the provisions of this chapter.
1710.6  One hundred lot exemption.
1710.7  Twelve lot exemption.
1710.8  Scattered site subdivisions.
1710.9  Twenty acre lots.
1710.10  Single-family residence exemption.
1710.11  Manufactured home exemption.
1710.12  Intrastate exemption.
1710.13  Metropolitan Statistical Area (MSA) exemption.
1710.14  Regulatory exemptions.
1710.15  Regulatory exemption--multiple site subdivision--determination 
          required.
1710.16  Regulatory exemption--determination required.
1710.17  Advisory opinion.
1710.18  No action letter.
1710.20  Requirements for registering a subdivision--Statement of 
          Record--filing and form.
1710.21  Effective dates.
1710.22  Statement of record--initial or consolidated.
1710.23  Amendment--filing and form.
1710.29  Use of property report--misstatements, omissions or 
          representation of HUD approval prohibited.
1710.35  Payment of fees.
1710.45  Suspensions.

                    Subpart B--Reporting Requirements

1710.100  Statement of Record--format.
1710.102  General instructions for completing the Statement of Record.
1710.103  Developer obligated improvements.
1710.105  Cover page.
1710.106  Table of contents.
1710.107  Risks of buying land.
1710.108  General information.
1710.109  Title to the property and land use.
1710.110  Roads.
1710.111  Utilities.
1710.112  Financial information.
1710.113  Local services.
1710.114  Recreational facilities.
1710.115  Subdivision characteristics and climate.
1710.116  Additional information.
1710.117  Cost sheet, signature of Senior Executive Officer.
1710.118  Receipt, agent certification and cancellation page.
1710.200  Instructions for Statement of Record, Additional Information 
          and Documentation.
1710.208  General information.
1710.209  Title and land use.
1710.210  Roads.
1710.211  Utilities.
1710.212  Financial information.
1710.214  Recreational facilities.
1710.215  Subdivision characteristics and climate.
1710.216  Additional information.
1710.219  Affirmation.
1710.310  Annual report of activity.

     Subpart C--Certification of Substantially Equivalent State Law

1710.500  General.
1710.503  Notice of certification.
1710.504  Cooperation among certified states and between certified 
          states and the Secretary.
1710.505  Withdrawal of State certification.
1710.506  State/Federal filing requirements.
1710.507  Effect of suspension or withdrawal of certification granted 
          under Sec. 1710.501(a): Full disclosure requirement.
1710.508  Effect of suspension of certification granted under 
          Sec. 1710.501(b): Sufficient protection requirement.
1710.552  Previously accepted state filings.
1710.556  Previously accepted state filings--amendments and 
          consolidations.
1710.558  Previously accepted state filings--notice of revocation rights 
          on property report cover page.
1710.559  Previously accepted state filings--notice of revocation rights 
          in contracts and agreements.

    Authority: 15 U.S.C. 1718; 42 U.S.C. 3535(d).



                     Subpart A--General Requirements

    Authority: Sec. 1419, Interstate Land Sales Full Disclosure Act, 82 
Stat. 590, 598; 15 U.S.C. 1718; sec. 7(d), Dept. of Housing and Urban 
Development Act, 42 U.S.C. 3535(d).



Sec. 1710.1  Definitions.

    (a) Statutory terms. All terms are used in accordance with their 
statutory meaning in 15 U.S.C. 1702 or with part 5 of this title, 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 Secretary 
as to jurisdiction in a particular case or the applicability of an 
exemption under Secs. 1710.5 through 1710.15, based on facts submitted 
to the Secretary.
    Available for use means that in addition to being constructed, the 
subject facility is fully operative and supplied

[[Page 8]]

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 
Secretary.
    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.
    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.
    OILSR means the Interstate Land Sales Registration program.
    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 
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.

[61 FR 13597, Mar. 27, 1996]



Sec. 1710.3  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.

(Approved by the Office of Management and Budget under control number 
2502-0243)

[45 FR 40479, June 13, 1980, as amended at 49 FR 31368, Aug. 6, 1984]



Sec. 1710.4  Exemptions--general.

    (a) The exemptions available under Secs. 1710.5 through 1710.16 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. 1710.5, 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

[[Page 9]]

    (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. 1710.5. 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. 1715.15(f).
    (d) Eligibility for exemptions available under Secs. 1710.5 through 
1710.14 is self-determining. With the exception of the exemptions 
available under Secs. 1710.15 and 1710.16, a developer is not required 
to file notice with or obtain the approval of the Secretary 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 OILSR Administrator or designee, the 
Department's position on the jurisdiction or non-exempt status of a 
particular subdivision.

[45 FR 40479, June 13, 1980, as amended at 54 FR 40866, Oct. 4, 1989]



Sec. 1710.5  Statutory exemptions from the provisions of this chapter.

    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.

[61 FR 13597, Mar. 27, 1996]



Sec. 1710.6  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. 1710.5. In the sale of lots in the subdivision 
that are not exempt under Sec. 1710.5, the developer must comply with 
the Act's anti-fraud provisions, set forth in Sec. 1710.4 (b) and (c).

[49 FR 31368, Aug. 6, 1984]



Sec. 1710.7  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 Secretary to establish a different 
twelve month period for use in determining eligibility for the exemption 
and the Secretary 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. 1710.4 (b) and (c) of this part.

[45 FR 40479, June 13, 1980, as amended at 49 FR 31368, Aug. 6, 1984]



Sec. 1710.8  Scattered site subdivisions.

    (a) The sale of lots in a subdivision consisting of noncontiguous 
parts is

[[Page 10]]

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. 1710.4 (b) and (c) of this part.

[45 FR 40479, June 13, 1980, as amended at 49 FR 31368, Aug. 6, 1984]



Sec. 1710.9  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 purchaser retains ownership of the property affected by the 
easement.
    (b) The sale must also comply with the anti-fraud provisions of 
Sec. 1710.4 (b) and (c) of this part.

[45 FR 40479, June 13, 1980, as amended at 49 FR 31368, Aug. 6, 1984]



Sec. 1710.10  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

[[Page 11]]

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. 1710.4 (b) and (c) of this part.

[45 FR 40479, June 13, 1980, as amended at 49 FR 31368, Aug. 6, 1984; 50 
FR 9269, Mar. 7, 1985]



Sec. 1710.11  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 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. 1710.4 (b) and (c) of this part.

[45 FR 40479, June 13, 1980, as amended at 49 FR 31368, Aug. 6, 1984; 49 
FR 33644, Aug. 24, 1984; 50 FR 9269, Mar. 7, 1985]



Sec. 1710.12  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:

[[Page 12]]

    (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. 1710.5, Sec. 1710.11 or 
Sec. 1710.13.
    (2) The purchaser or purchaser's spouse makes a personal on-the-lot 
inspection of the lot to be purchased before signing a contract.
    (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 (a)(6) of this section, an

[[Page 13]]

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 (a)(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 U.S. Department of Housing and Urban Development. A 
sample Intrastate Exemption Statement is included in the exemption 
guidelines.
    (c) The sale must also comply with the anti-fraud provisions of 
Sec. 1710.4 (b) and (c) of this part.

[45 FR 40479, June 13, 1980, as amended at 49 FR 31368, 31369, Aug. 6, 
1984]



Sec. 1710.13  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 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

[[Page 14]]

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 U.S. 
Department of Housing and Urban Development. 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 Secretary 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 Secretary's 
review at all times during the year.
    The affirmation must be in the following form:

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 24 CFR 1710.13 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) ________________________________________________________________

    (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. 1710.4 (b) and (c).

[45 FR 40479, June 13, 1980, as amended at 49 FR 31369, Aug. 6, 1984]



Sec. 1710.14  Regulatory exemptions.

    (a) Eligibility requirements. The following transactions are exempt 
from the registration requirements of the

[[Page 15]]

Act unless the Secretary 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 preceeding the sale.
    (b) Termination. If the Secretary has reasonable grounds to believe 
that exemption from the registration requirements in a particular case 
is not in the public interest, the Secretary may, after issuing a notice 
and giving the respondent an opportunity to request a hearing within 
fifteen days of receipt of the notice, terminate eligiblity 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. 1720.238.
    (c) The sale must also comply with the anti-fraud provisions of 
Sec. 1710.4 (b) and (c) of this part.

[45 FR 40479, June 13, 1980, as amended at 49 FR 31370, Aug. 6, 1984]



Sec. 1710.15  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 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 following non-waivable provision 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:

    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 pursuant 
to the rules and regulations of the Interstate Land Sales Registration 
Division, U.S. Department of

[[Page 16]]

Housing and Urban Development, 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.


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 24 
CFR 1710.4 (b) and (c) and the sales practices and standards in 24 CFR 
1715.10 through 1715.28.
    (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 OILSR 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.

                              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 
1710.15(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

[[Page 17]]

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: Interstate Land Sales Registration Division, 
HUD Building, Room 6278, 451 Seventh Street, SW., Washington, DC 20410.
    (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:_______________________________________________

    (c) Request for Multiple Site Subdivision Exemption. (1) The 
developer must file a request for the Multiple Site Subdivision 
Exemption in the following format. The request must be accompanied by a 
filing fee of $500 (prepared in accordance with Sec. 1710.35 (a)) and a 
sample Lot Information Statement.

             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 24 CFR 1710.15.
    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.


[[Page 18]]


    (2) This exemption will become effective upon issuance of an 
Exemption Order by the Secretary.
    (d) Annual Report. (1) By January 31 of each year the developer will 
send a report to the Secretary 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 Secretary 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 Secretary has reasonable grounds to believe that exemption 
from the registration requirements in the particular case is not in the 
public interest, the Secretary 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 Secretary, 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 24 CFR 1720.238.

[54 FR 40866, Oct. 4, 1989]



Sec. 1710.16  Regulatory exemption--determination required.

    (a) General. The Secretary 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 Secretary 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 accordance with 
Sec. 1710.35(a) of this part. This fee is not refundable.
    (c) Request. The request for an Exemption Order must be in the 
following format:

                       Request for Exemption Order

Subdivision_____________________________________________________________
Location (including county)_____________________________________________
Developer_______________________________________________________________

[[Page 19]]

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 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 1418 of the Housing and Urban Development Act of 
1968 (83 Stat. 598, 15 U.S.C. 1717 as amended) provides: ``any person 
who willfully violates any of the provisions of this title or the rules 
and regulations prescribed pursuant thereto * * *, shall upon conviction 
be fined not more than $10,000.00 or imprisoned not more than five 
years, or both.''

    (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. 1710.4 (b) and (c) of this part.
    (f) Termination. If, subsequent to the issuance of an exemption 
order, the Secretary has reasonable grounds to believe that exemption 
from the registration requirements in the particular case is not in the 
public interest, the Secretary 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 Secretary, 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. 1720.238.

[45 FR 40479, June 13, 1980, as amended at 49 FR 31370, 31373, Aug. 6, 
1984]



Sec. 1710.17  Advisory opinion.

    (a) General. A developer may request an opinion from the Secretary 
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. 1710.35(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 shown below:

                         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.


[[Page 20]]


_______________________________________________________________________
(Date)
_______________________________________________________________________
(Signature)
_______________________________________________________________________
(Title)

    Warning: Section 1418 of the Housing and Urban Development Act of 
1968 (83 Stat. 598, 15 U.S.C. 1717 as amended) provides: ``Any person 
who willfully violates any of the provisions of this title or the rules 
and regulations prescribed pursuant thereto * * *, shall upon conviction 
be fined not more than $10,000.00 or imprisoned not more than five 
years, or both.''

[45 FR 40479, June 13, 1980, as amended at 49 FR 31370, 31373, Aug. 6, 
1984]



Sec. 1710.18  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 Secretary 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 Secretary 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.

[45 FR 40479, June 13, 1980]



Sec. 1710.20  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 Secretary. The official address to be used 
is:

Office of Interstate Land Sales Registration, Department of Housing and 
Urban Development, 451 Seventh Street, SW., Washington, DC 20410.


When the Statement of Record is filed, a fee in the amount set out in 
Sec. 1710.35(b) must be paid in accordance with Sec. 1710.35(a).
    (b) Form. The Statement of Record shall be in the format specified 
in Sec. 1710.100 and shall be completed in accordance with the 
instructions in Secs. 1710.102, 1710.105 through 1710.118, 1710.200, 
1710.208 through 1710.216 and 1710.219. It shall be supported by the 
documents required by Secs. 1710.208 through 1710.216 and 1710.219. It 
shall include any other information or documents which the Secretary may 
require as being necessary or appropriate for the protection of 
purchasers.
    (c) State filings. A Statement of Record submitted under the 
provisions of 24 CFR part 1710, subpart C--Certification of 
Substantially Equivalent State Law, shall consist of the materials 
designated by the Certification Agreement between the Secretary and the 
certified State in which the subdivision is located.

(Pub. L. 90-448, 82 Stat. 476, 590; 15 U.S.C. 1701 et seq.)

[44 FR 21453, Apr. 10, 1979, as amended at 50 FR 10942, Mar. 19, 1985; 
63 FR 54332, Oct. 8, 1998]



Sec. 1710.21  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 Secretary notifies the developer 
in writing prior to such 30th day that:
    (1) The effective date has been suspended in accordance with 
Sec. 1710.45(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 Secretary upon request.

[[Page 21]]

    (2) Upon acceptance by the Secretary, 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 Secretary allows those amendments to become 
effective.

(Pub. L. 90-448, 82 Stat. 476, 590; 15 U.S.C. 1701 et seq.)

[44 FR 21453, Apr. 10, 1979, as amended at 49 FR 31370, Aug. 6, 1984]



Sec. 1710.22  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.
    (4) Any initial Statement of Record must be accompanied by a fee, as 
specified in Sec. 1710.35(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. 1710.35(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. 1710.35(b), based on the number of additional lots.
    (c) Consolidated Statement of Record--Form. A consolidated Statement 
of Record shall contain:
    (1) Those pages of the Property Report portion and Additional 
Information and Documention 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 incorporated 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. 1710.219.

Pages having no changes and documents in previous submissions which 
apply equally to the additional lots may be incorporated 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.
    (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

[[Page 22]]

for those transactions which are exempt from the provisions of the Act 
or which have been granted an exempt status by the Secretary, unless the 
Secretary 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 Secretary's permission to file a separate 
initial Statement of Record for the additional lots. Upon consideration 
of the facts submitted, the Secretary 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.

(Pub. L. 90-448, 82 Stat. 476, 590; 15 U.S.C. 1701 et seq.)

[44 FR 21453, Apr. 10, 1979, as amended at 45 FR 40488, June 13, 1980]



Sec. 1710.23  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 incorporate 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 OILSR 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. 1710.310; and
    (3) An amendment fee, if required under Sec. 1710.35(d)(2).

(Pub. L. 90-448, 82 Stat. 476, 590; 15 U.S.C. 1701 et seq.)

[44 FR 21453, Apr. 10, 1979, as amended at 49 FR 31373, Aug. 6, 1984]



Sec. 1710.29  Use of property report--misstatements, omissions or representation of HUD approval prohibited.

    Nothing is 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 Secretary, OILSR or the Department of 
Housing and Urban Development.

(Pub. L. 90-448, 82 Stat. 476, 590; 15 U.S.C. 1701 et seq.)

[44 FR 21453, Apr. 10, 1979]



Sec. 1710.35  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

[[Page 23]]

mailed to an address specified by the Secretary; or
    (ii) Electronic payment in a manner specified by the Secretary.
    (2) Information regarding the current mailing address or electronic 
payment procedures is available from: HUD, Office of Interstate Land 
Sales/RESPA Division, Room 9156, 451 7th St., SW., Washington, DC 20410.
    (b) Fees for registration. The fee for each initial and consolidated 
registration is set forth in the following schedule:

------------------------------------------------------------------------
                        Number of lots                            Fees
------------------------------------------------------------------------
200 or fewer lots.............................................      $800
201 or more lots..............................................    $1,000
------------------------------------------------------------------------

    (c) Fee for Exemption Order or Advisory Opinion. The filing fee for 
an Exemption Order or an Advisory Opinion (Sec. 1710.16 or Sec. 1710.17) 
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 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.

(Pub. L. 90-448, 82 Stat. 476, 590; 15 U.S.C. 1701 et seq.)

[44 FR 21453, Apr. 10, 1979, as amended at 49 FR 31373, Aug. 6, 1984; 63 
FR 54332, Oct. 8, 1998]



Sec. 1710.45  Suspensions.

    (a) Suspension notice--prior to effective date. (1) If it appears to 
the Secretary that a Statement of Record or an amendment is on its face 
incomplete or inaccurate in any material respect, the Secretary 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 
Secretary 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 Secretary.
    (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 Secretary 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 Secretary may, after notice, and 
after opportunity for a hearing requested pursuant to Sec. 1720.220 
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 Secretary shall so declare and thereupon the suspension order 
shall cease to be effective.
    (2) If the Secretary 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 Secretary or obstructs, or 
refuses to permit the Secretary to make such examination, the Secretary 
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 Secretary shall so declare and thereupon the suspension 
order shall cease to be effective. In accordance with the procedure 
described in Sec. 1720.235, a hearing may be requested.
    (3) Upon receipt of an amendment to an effective Statement of 
Record, the Secretary may issue an order suspending the Statement of 
Record until

[[Page 24]]

the amendment becomes effective if the Secretary 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. 1720.235, 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.

(Pub. L. 90-448, 82 Stat. 476, 590; 15 U.S.C. 1701 et seq.)

[44 FR 21453, Apr. 10, 1979]



                    Subpart B--Reporting Requirements

    Authority: Pub. L. 90-448, 82 Stat. 476, 590; 15 U.S.C. 1701 et 
seq., unless otherwise noted.

    Source: 44 FR 21453, Apr. 10, 1979, unless otherwise noted.



Sec. 1710.100  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 following format:

                             Property Report

                       Heading and Section Number

Cover Sheet.....................................................1710.105
Table of Contents...............................................1710.106
Risks of Buying Land, Warnings..................................1710.107
General Information.............................................1710.108
Title and Land Use..............................................1710.109

    (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...........................................................1710.110
Utilities.......................................................1710.111

    (a) Water
    (b) Sewer
    (c) Electricity
    (d) Telephone
    (e) Fuel or other Energy Source

Financial Information...........................................1710.112
Local Services..................................................1710.113
Recreational Facilities.........................................1710.114
Subdivision Characteristics and Climate.........................1710.115

    (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..........................................1710.116

    (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......................................................1710.117
Receipt, Agent Certification and Cancellation Page..............1710.118

                Additional Information and Documentation

General Information.............................................1710.208
Title and Land Use..............................................1710.209
Roads...........................................................1710.210
Utilities.......................................................1710.211
Financial Information...........................................1710.212
Recreational Facilities.........................................1710.214
Subdivision Characteristics.....................................1710.215
Additional Information..........................................1710.216
Affirmation.....................................................1710.219

(Approved by the Office of Management and Budget under control number 
2502-0243)

[44 FR 21453, Apr. 10, 1979, as amended at 49 FR 31370, Aug. 6, 1984; 49 
FR 33644, Aug. 24, 1984]



Sec. 1710.102  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 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

[[Page 25]]

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 style of elite or pica or similar type 
of uniform font in blue, black or blueblack ink.
    (b) Numbering and dating. Each page of the Statement of Record as 
submitted to OILSR 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 Secretary, 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 
1710.106 through 1710.116 (e.g. Sec. 1710.108 has ``General 
Information'' and Sec. 1710.111 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. 1710.111. 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. 1710.109 (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. Headings and subheadings will be 
used in the Property Report in accordance with the sample page appearing 
in Sec. 1710.102. 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. 1710.109(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 Secs. 1710.105 through 1710.118. 
They shall be printed in capital letters and enclosed in a box as shown 
on the sample page in Sec. 1710.102. The paragraphs in the Property 
Report portion need not be numbered.

[[Page 26]]

                                     

                               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.

----------------------------------------------------------------------------------------------------------------
                                         Percentage
                    Estimated starting       of            Estimated
       Unit           date (month and   construction    completion date     Present surface      Final surface
                           year)        now complete   (month and year)
----------------------------------------------------------------------------------------------------------------
1.................  February 1979.....           50   December 1979.....  Gravel............  Asphalt.
2.................  August 1979.......            0   June 1980.........  Dirt..............      Do.
3.................  April 1980........            0   October 1980......  None..............      Do.
----------------------------------------------------------------------------------------------------------------

    (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

[[Page 27]]

the prospective purchaser and the pronouns ``we'', ``us'', and ``our'' 
shall generally be used in referring to the developer. The Secretary 
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 by reference. 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 Secretary 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 Secretary 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 Secretary 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 Secretary 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 OILSR number

[[Page 28]]

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 this Office 
within 20 days of the date on which the Statement of Record, amendment, 
or consolidation is allowed to become effective by the Secretary. If a 
Property Report in a foreign language is used as required by 
Sec. 1715.25(g), three copies of that Property Report together with 
copies of the translated documents shall be furnished the Secretary 
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 Secretary.

(Approved by the Office of Management and Budget under control number 
2502-0243)

[44 FR 21453, Apr. 10, 1979, as amended at 45 FR 40488, June 13, 1980; 
49 FR 31370, Aug. 6, 1984; 49 FR 33644, Aug. 24, 1984]



Sec. 1710.103  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 
obligated to do so (see Sec. 1715.15(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. 1715.15(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. 1710.110, 
Sec. 1710.111 or Sec. 1710.114, 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 
an can give no assurance that it will be completed or available for use.

[49 FR 31370, Aug. 6, 1984]



Sec. 1710.105  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 following paragraphs 
beginning \1/4\ inch below the last line of the warning:

    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

[[Page 29]]

time within two years from the date of signing.

Name of Subdivision_____________________________________________________
Name of Developer_______________________________________________________
Date of This Report_____________________________________________________

    (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, exlusive 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 
recision 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 
Secretary allows the Statement of Record to become effective and shall 
not be entered until the submission has become effective.

(Sec. 1419, Interstate Land Sales Full Disclosure Act, 82 Stat. 590, 
598; 15 U.S.C. 1718; sec. 7(d), Dept. of Housing and Urban Development 
Act, 42 U.S.C. 3535(d))

[45 FR 40489, June 13, 1980]



Sec. 1710.106  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. For example, the entry for Title 
and Land Use would appear as follows:

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

    (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. 1710.107  Risks of buying land.

    (a) The next page shall be headed ``Risks of Buying Land'' and shall 
contain the paragraphs listed below. However, paragraph (a)(2) of this 
section may be omitted if all improvements have been completed or if no 
improvements are proposed.
    (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.
    (3) Resale of your lot may be difficult or impossible, since you may 
face the competition of our own sales program

[[Page 30]]

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.
    (b) Warnings. If the instructions or the Secretary 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. 1710.108  General information.

    Insert and complete the following format:

    ``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.''



Sec. 1710.109  Title to the property and land use.

    (a) General instructions. (1) Below the heading ``Title to the 
Property and Land Use'' insert the following introductory paragraphs:

    ``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.''

    (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 printed in Sec. 1710.102.
    (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 contract. This may cause you to lose your lot and any 
monies paid on it.''


[[Page 31]]


    (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 
Secretary 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 following statement or one substantially the same 
in the disclosure narrative below the caption ``Release Provisions'':

    ``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.''

    (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. 1710.209. 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 following warning or a warning substantially the same, in 
the disclosure narrative under the ``Release Provisions'' caption:

    ``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.''

    (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

[[Page 32]]

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 following, 
or substantially the same, warning in the disclosure narrative under the 
caption ``Method and Purpose of Recording'':

    ``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''.


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 following statement in the disclosure narrative 
under the caption ``Escrow'':

    ``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.''


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

[[Page 33]]

for purposes which could adversely affect the use and enjoyment of 
surrounding lots.
    (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. 1710.110  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

[[Page 34]]

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 following chart 
shall be used rather than a narrative paragraph.

----------------------------------------------------------------------------------------------------------------
                                        Percentage of          Estimated
     Unit        Estimated starting    construction now     completion date       Present        Final surface
                 date (month/year)         complete           (month/year)        surface
----------------------------------------------------------------------------------------------------------------
 
 
 
----------------------------------------------------------------------------------------------------------------

    (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 following 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.

Nearby Communities..................................................... 
Population............................................................. 
Distance Over Paved Roads.............................................. 
Distance Over Unpaved Roads............................................ 
      Total............................................................ 

    (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. 1710.111  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 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

[[Page 35]]

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 following 
chart form rather than in a narrative paragraph.

                                  Water
------------------------------------------------------------------------
                 Estimated        Percentage of      Estimated service
    Unit       starting date    construction now     availability date
             (month and year)       complete          (month and year)
------------------------------------------------------------------------
 
 
 
------------------------------------------------------------------------

    (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.

[[Page 36]]

    (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 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. 1710.111(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 following warning 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.

    ``We do not own or operate the central water system so we cannot 
assure its continued availability for your use.''

    (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 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

[[Page 37]]

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 following 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.

                            Comfort Stations

Unit....................................................................
Estimated Starting Date (month-year)....................................
Percentage of Construction now complete.................................
Estimated Service Availability Date (month and year)....................

    (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 
following 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.

                                  Sewer

Unit Estimated Starting Date (month/year)...............................
Percentage of Construction now complete.................................
Estimated Service Availability Date (month/year)........................


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 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

[[Page 38]]

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. 1710.111(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.
    (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 following warning 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.

    ``We do not own or operate the central sewer system so we cannot 
assure its continued availability for your use.''

    (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

[[Page 39]]

lots and there are separate units or sections having different service 
availability dates, the following chart shall be used rather than a 
narrative paragraph.

                            Electric Service
------------------------------------------------------------------------
                 Estimated        Percentage of      Estimated service
    Unit       starting date      construction       availability date
             (month and year)       complete          (month and year)
------------------------------------------------------------------------
 
 
 
------------------------------------------------------------------------

    (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. 1710.112  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;

[[Page 40]]

    (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 OILSR as outlined in Sec. 1710.212(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. 1710.212(b) may necessitate a 
warning as to costs and/or feasibility of the completion of the 
subdivision.

[44 FR 21453, Apr. 10, 1979, as amended at 49 FR 31370, Aug. 6, 1984]



Sec. 1710.113  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. 1710.114  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:
    (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 below chart in 
accordance with the instructions which follow it. This chart shall 
immediately follow the Sec. 1710.114 heading. Limit the chart to 
facilities provided essentially for use of lot buyers.

----------------------------------------------------------------------------------------------------------------
                                      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
----------------------------------------------------------------------------------------------------------------
 
 
----------------------------------------------------------------------------------------------------------------

    (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

[[Page 41]]

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. 1710.214 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

[[Page 42]]

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, etc.). 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''.

[44 FR 21453, Apr. 10, 1979, as amended at 45 FR 40489, June 13, 1980; 
50 FR 10942, Mar. 19, 1985]



Sec. 1710.115  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?
    (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 decription 
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., unusal 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

[[Page 43]]

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, etc.)? 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. 1710.116  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 necessay 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 
purchasers 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 
Secretary 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

[[Page 44]]

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? (OILSR suspension notices on 
preeffective 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?
    (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

[[Page 45]]

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, 
religion, sex or national origin 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 or national origin 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 or national origin.
    (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.

[44 FR 21453, Apr. 10, 1979, as amended at 49 FR 31370, 31371, Aug. 6, 
1984]



Sec. 1710.117  Cost sheet, signature of Senior Executive Officer.

    (a) Cost sheet--Format. (1) The cost sheet shall be prepared in 
accordance with the following format and paragraph (a)(2) of this 
section.

                               Cost Sheet

    In additon 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@@Q02
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...  $.........
                                                                  ......
                                                             ===========

[[Page 46]]

 
     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

    (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 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 Secretary, 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 p__urposes of reproduction of the 
property Report.

[44 FR 21453, Apr. 10, 1979, as amended at 49 FR 31371, Aug. 6, 1984]



Sec. 1710.118  Receipt, agent certification and cancellation page.

    (a) Format. The receipt, agent certification and cancellation page 
shall be prepared in accordance with the sample printed herein.

                                     

           Receipt, Agent Certification and Cancellation Page

                            purchaser receipt

                        Important: Read Carefully

Name of subdivision

OILSR 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 
        ______

    If any representations are made to you which are contrary to those 
in this Report, please notify the:


[[Page 47]]


                      Office of Interstate Land Sales Registration
                      HUD Building, 451 Seventh Street, S.W.
                      Washington, D.C. 20410

                           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 ______
    (b) The original and one copy of this page shall be attached to the 
Property Report delivered to prospective purchasers. Carbon paper may be 
inserted between the two so that after the purchaser has signed the 
receipt and the salesman has signed the certification, the copy can be 
detached and 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 Secretary, the developer shall, without 
delay, make the copies of these receipts and certifications available 
for inspection by the Secretary or the developer shall forward to the 
Secretary any of the receipts and certifications, or copies thereof, as 
the Secretary 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. 1710.200  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 Secs. 1710.208 through 1710.219. 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

[[Page 48]]

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. 1710.208  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 OILSR 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 
Secs. 1710.116 and 1710.216.
    (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 
Secretary must be able to reconcile the numbers stated here with the 
title evidence; the plat maps and the disclosure in Sec. 1710.108.
    (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 this Office. 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 
OILSR 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 
OILSR. 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 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

[[Page 49]]

or indirectly involved in any other subdivision containing 100 or more 
lots. If so, identify the subdivision by name, location, and OILSR 
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 incorporated 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.

[44 FR 21453, Apr. 10, 1979, as amended at 45 FR 40489, June 13, 1980; 
49 FR 31371, Aug. 6, 1984]



Sec. 1710.209  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

[[Page 50]]

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 Secretary. 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 following documents:
    (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.

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 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.
    (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

[[Page 51]]

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 (e)(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 Office of Interstate Land Sales 
Registration, U.S. Department of Housing and Urban Development, 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

[[Page 52]]

shown on the Cover Page (see Sec. 1710.105).
    (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. 1715.15(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.
    (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 easments 
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 Secretary must be able to reconcile the totals of 
these numbers with the information given in Secs. 1710.108 and 1710.208 
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.

[44 FR 21453, Apr. 10, 1979, as amended at 45 FR 40489, June 13, 1980; 
49 FR 31371, Aug. 6, 1984]



Sec. 1710.210  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

[[Page 53]]

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. 1710.211  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.

[[Page 54]]

    (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 
incorporated 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. 1710.212  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.
    (b) Complete the following format:
    (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:

(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) need be 
completed.)
    (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. 1710.212(c)(1), 
unless the developer has qualified for an exception under 
Sec. 1710.212(e), and must be submitted

[[Page 55]]

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. 1710.310(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 Secretary 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) are met, plus the conditions of one of paragraphs (e)(3)(ii)(C), 
(D), or (E):
    (A) Downpayments 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 
OILSR 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. If the developer is a 
subsidiary company and does not have audited financial statements, the 
Secretary may permit the use of the audited and certified statements of 
the parent company: Provided, That those statements are accompanied by 
an unconditional

[[Page 56]]

guaranty that the parent shall perform and fulfill the obligations of 
the subsidiary. If this procedure is adopted, the developer shall submit 
the following:
    (1) The audited and certified financial statements of the parent 
company, together with interim statements if necessary, which comply 
with Sec. 1710.212(c).
    (2) A properly executed guaranty in a form acceptable to the 
Secretary.

The disclosure information required in Sec. 1710.112 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 Secretary may accept the statements and require such additional 
disclosure as the Secretary 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 
Secretary 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 Secretary 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 subdivison, 
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 OILSR, 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 
(e)(3)(iv) above.
    (2) The Secretary 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 Secretary that the acceptance of unaudited 
statements would not be a detriment to the public interest or to the 
protection of purchasers.

[44 FR 21453, Apr. 10, 1979, as amended at 45 FR 40490, June 13, 1980; 
49 FR 31372, Aug. 6, 1984; 50 FR 10942, Mar. 19, 1985]



Sec. 1710.214  Recreational facilities.

    (a) Submit a synopsis of the proposed plans and estimated cost of 
any proposed or partially constructed recreational facility disclosed in 
Sec. 1710.114. 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. 1710.114 
which are not structurally complete.
    (c) Submit a copy of the lease for any leased recreational facility.



Sec. 1710.215  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

[[Page 57]]

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 which 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. 1710.216  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. 1710.116(a) at 
the discretion of the Secretary.
    (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) Submit a copy of any advertising or promotional material that 
is, or has been, used for the subdivision that:
    (i) Mentions or refers to recreational facilities which are not 
disclosed in Sec. 1710.114, 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.

Amendments to reflect changes in advertising or promotional material 
need be filed only when there is a material change related to one of the 
above factors. Depending upon the content of the material submitted, the 
Secretary may require additional warnings in the Property Report 
portion.
    (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. 1710.116(c).
    (2) If it is indicated in Sec. 1710.116(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

[[Page 58]]

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. 1710.116(c).
    (d) Resale or exchange program. (1) If it is stated in 
Sec. 1710.116(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. 1710.219  Affirmation.

    The following affirmation shall be executed by the senior executive 
officer or a duly authorized agent:

    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 Office of Interstate Land 
Sales Registration.

_______________________________________________________________________
(Date)
_______________________________________________________________________
(Signature)
_______________________________________________________________________
(Corporate seal if applicable)
_______________________________________________________________________
(Title)

    Warning: Section 1418 of the Housing and Urban Development Act of 
1968 (82 Stat. 598, 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.''

[45 FR 40490, June 13, 1980]



Sec. 1710.310  Annual report of activity.

    (a) As an integral part of the Statement of Record, the developer 
shall file with the Secretary 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. 1710.500, a 
developer need file only one Annual Report of Activity for any 
registration for which the OILSR 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

[[Page 59]]

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 Secretary (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. 1710.35.
    (e) Failure to submit the report when due shall be grounds for an 
action to suspend the effective Statement of Record.

(Approved by the Office of Management and Budget under control number 
2502-0243)

[49 FR 31373, Aug. 6, 1984]



     Subpart C--Certification of Substantially Equivalent State Law

    Authority: Sec. 1419, Interstate Land Sales Full Disclosure Act, 82 
Stat. 590, 598; 15 U.S.C. 1718; sec. 7(d), Dept. of Housing and Urban 
Development Act, 42 U.S.C. 3535(d).

    Source: 45 FR 40491, June 13, 1980, unless otherwise noted.



Sec. 1710.500  General.

    (a) This subpart establishes procedures and criteria for certifying 
State land sale or lease disclosure programs and 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 registration and disclosure 
requirements, without affecting the level of protection given to the 
individual purchaser or lessee. If the Secretary 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 
Federal Interstate Land Sales Registration Program, then the Secretary 
shall certify that state. Developers who accomplish an effective 
registration with a state in which the land is located after the 
Secretary has certified the state may satisfy the registration 
requirements of the Secretary by filing with the Secretary materials 
designated by agreement with certified states in lieu of the federal 
Statement of Record and Property Report.
    (b) A state that is certified by the Secretary shall be known as the 
situs certified state for all land located within its borders.
    (c) After a developer is effectively registered with the Secretary 
through a certified state, the Secretary has the same authority over 
that developer as the Secretary has over developers who file directly 
with the Secretary. This includes the authority to subpoena information 
and to examine, evaluate and suspend a developer's registration under 
sections 1407(d) and (e) of the Act and Sec. 1710.45(b)(1) and (b)(2) of 
these regulations.

[[Page 60]]

    (d) The prohibitions against the use of the Property Report 
contained in Sec. 1710.29 apply to state disclosure materials and 
substantive development standards. In addition, for purposes of this 
paragraph, references made to the Secretary, OILSR and the Department of 
Housing and Urban Development in Sec. 1710.29 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 1715 of these regulations apply to developers 
who register with the Secretary through certified States. All of the 
rules in part 1715 apply, excepting the disclaimer statement in 
Sec. 1715.50(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. 1710.35 of these regulations.



Sec. 1710.503  Notice of certification.

    (a) If the Secretary determines that a state qualifies for 
certification under Sec. 1710.501(a) or Sec. 1710.501(b), the Secretary 
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 Secretary determines that a state does not meet the 
standards for certification, the Secretary 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 Secretary 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 Secretary'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 Secretary. A 
state can voluntarily suspend its certification by notifying the 
Secretary in writing. The suspension will take effect as of the date and 
time specified in the notice to the Secretary, or upon receipt by the 
Secretary if no date is specified. The Secretary may withdraw 
certification as provided in Sec. 1710.505.



Sec. 1710.504  Cooperation among certified states and between certified states and the Secretary.

    (a) By filing an Application for Certification of State Land Sales 
Program pursuant to Sec. 1710.502, a state agrees that, if it is 
certified by the Secretary, 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 Secretary 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 Secretary and all other certified states. The 
certification shall indicate whether the documents are currently in 
effect. The certification should state as follows:

    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

    (3) Assist and cooperate with the Secretary 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 Secretary

[[Page 61]]

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 Secretary 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 Secretary.
    (5) Assist and cooperate with the Secretary by monitoring the sales 
practices of developers registered with it directly or through another 
certified state, and by reporting to the Secretary 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 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 Secretary 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. 1710.505  Withdrawal of State certification.

    (a) The Secretary shall periodically review the laws, regulations 
and administration thereof, of a certified state. If the Secretary finds 
that, taken as a whole, the laws, regulations or administration thereof, 
no longer meet the requirements of subpart C, then the Secretary 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 Secretary pursuant to Sec. 1720.236. 
The Secretary may, after notice and after an opportunity for a hearing, 
pursuant to Sec. 1720.237, 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 Secretary shall so declare and the 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 chapter IX of 24 CFR part 1720, subpart D will 
generally apply to hearings on withdrawal of a state's certification.



Sec. 1710.506  State/Federal filing requirements.

    (a)(1) If the Secretary has certified a state under Sec. 1710.501, 
the Secretary 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

[[Page 62]]

by the developer with the state after the state was certified by the 
Secretary shall be automatically accepted by the Secretary.
    (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 Secretary determines that retroactive application will 
not result in automatic 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 Secretary, the 
developer shall file with the Secretary a state certified copy of the 
Property Report or its equivalent, and any other documentation as 
stipulated in the Secretary'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 Secretary.
    (d) The Secretary has authority pursuant to Sec. 1710.45(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 Secretary 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 Secretary within 15 days after becoming effective under 
the applicable state laws. Amendments are automatically effective upon 
their receipt by the Secretary and the provisions of Sec. 1710.45(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. 1710.504(a)(2).
    (f) If a certified state suspends the registration of a particular 
subdivision for any reason, the subdivision's federal registration with 
the Secretary shall be automatically suspended as a result of the state 
action. No action need be taken by the Secretary to effect the 
suspension.
    (g) A state is certified only with regard to land located within the 
state borders. The Secretary 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 Secretary and State B is not, the 
Secretary is not required to accept filings from State B simply because 
State A accepts filings from State B.



Sec. 1710.507  Effect of suspension or withdrawal of certification granted under Sec. 1710.501(a): Full disclosure requirement.

    (a) If a state certified under Sec. 1710.501(a) suspends its own 
certification or has its certification withdrawn under Sec. 1710.505, 
the Federal disclosure materials accepted and made effective by the 
Secretary, pursuant to Sec. 1710.506, prior to the suspension or 
withdrawal shall remain in effect unless otherwise suspended by the 
Secretary.
    (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), the developer shall file a new registration with the 
Secretary meeting the requirements of the then applicable Federal 
registration regulations. Modifications of the Federal format may be 
used as specified by the Secretary.



Sec. 1710.508  Effect of suspension of certification granted under Sec. 1710.501(b): Sufficient protection requirement.

    (a) If a state certified under Sec. 1710.501(b) suspends its own 
certification or has its certification withdrawn under Sec. 1710.505, 
the effectiveness of the Federal disclosure materials accepted and made 
effective by the Secretary, pursuant to Sec. 1710.506, prior to the 
suspension or withdrawal shall terminate ninety (90) days after the 
notice

[[Page 63]]

of withdrawal order is published in the Federal Register as provided in 
Sec. 1710.505(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), the developer shall file a new registration with the 
Secretary meeting the requirements of the then applicable Federal 
registration regulations. Modifications of the Federal format may be 
used as specified by the Secretary.



Sec. 1710.552  Previously accepted state filings.

    (a) Materials filed with a state and accepted by the Secretary as a 
Statement of Record prior to January 1, 1981, pursuant to 24 CFR 
1710.52-59 (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 Secs. 1710.558 and 1710.559, which require that the 
Property Report and contracts or agreements contain notice of 
purchaser's revocation rights. In addition see Sec. 1715.15(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 Secretary shall be ineffective 
from that time.
    (c) Such Statement of Record may be suspended pursuant to 
Sec. 1710.45.
    (d) The Secretary may refuse to accept any particular filing under 
this section when it is determined that acceptance is not in the public 
interest.
    (e) The Secretary may require such changes, additional information, 
documents or certification as the Secretary determines to be reasonably 
necessary or appropriate in the public interest.



Sec. 1710.556  Previously accepted state filings--amendments and consolidations.

    (a) Amendments--(1) General requirements. State accepted materials, 
filed with the Secretary pursuant to Sec. 1710.552 shall be amended to 
reflect any amendment to such materials made effective by the state or 
any change of 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 Secretary 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 Secretary 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 Secretary. These pages shall be retyped 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. 1710.35.
    (b) Consolidations--(1) When consolidations allowed. If lots are to 
be registered pursuant to Sec. 1710.552 which are in the same common 
promotional plan with other lots already registered with the Secretary, 
then new consolidated state accepted materials including such lots may 
be filed with the Secretary 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 Secretary as a Statement of Record

[[Page 64]]

(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 Secretary for other lots 
in the subject common promotional plan may be incorporated by reference 
into the new consolidation materials submitted as a Statement of Record. 
However, such documentation may be incorporated by reference 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. 1710.35.
    (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. 1710.21.

[45 FR 40491, June 13, 1980, as amended at 49 FR 31372, Aug. 6, 1984]



Sec. 1710.558  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 
Secretary pursuant to Sec. 1710.552 shall be prepared in accordance with 
Sec. 1710.105 and shall include the following paragraphs:

    ``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.''

    (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 
rescision language:

    ``Under Federal law you may cancel your contract or agreement of 
sale any time within two years from the date of signing.''



Sec. 1710.559  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 Secretary pursuant to 
Sec. 1710.552, 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:


[[Page 65]]


    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 Office of Interstate Land Sales 
Registration, U.S. Department of Housing and Urban Development, 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.

    (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. 1710.558).
    (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.



PART 1715--PURCHASERS' REVOCATION RIGHTS, SALES PRACTICES AND STANDARDS--Table of Contents




                Subpart A--Purchasers' Revocation Rights

Sec.
1715.1  General.
1715.2  Revocation regardless of registration.
1715.4  Contract requirements and revocation.
1715.5  Reimbursement.

                Subpart B--Sales Practices and Standards

1715.10  General.
1715.15  Unlawful sales practices--statutory provisions.
1715.20  Unlawful sales practices--regulatory provisions.
1715.25  Misleading sales practices.
1715.27  Fair housing.
1715.30  Persons to whom subpart B is inapplicable.

                   Subpart C--Advertising Disclaimers

1715.50  Advertising disclaimers; subdivisions registered and effective 
          with HUD.

    Authority: 15 U.S.C. 1718; 42 U.S.C. 3535(d).

    Source: 45 FR 40496, June 13, 1980, unless otherwise noted.



                Subpart A--Purchasers' Revocation Rights



Sec. 1715.1  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.

[61 FR 13597, Mar. 27, 1996]



Sec. 1715.2  Revocation regardless of registration.

    All purchasers have the option to revoke a contract or lease with 
regard to a lot not exempt under Secs. 1710.5 through 1710.11 and 
1710.14 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.

[61 FR 13597, Mar. 27, 1996]



Sec. 1715.4  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 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.

[[Page 66]]

    (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.

[61 FR 13598, Mar. 27, 1996]



Sec. 1715.5  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.

[61 FR 13598, Mar. 27, 1996]



                Subpart B--Sales Practices and Standards



Sec. 1715.10  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. 1715.15  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 incorporated by reference must be specified in the contract of 
sale or lease.

[61 FR 13598, Mar. 27, 1996]



Sec. 1715.20  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 Secs. 1710.109(f), 1710.112(d), 1710.209(g) 
and 1710.212(i).
    (h) Use, as a sales inducement, any representation that any lot has 
good

[[Page 67]]

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. 1715.25  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 (1) the improvements are 
only proposed or (2) 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 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

[[Page 68]]

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. 1715.27  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.

[61 FR 13598, Mar. 27, 1996]



Sec. 1715.30  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. 1715.50  Advertising disclaimers; subdivisions registered and effective with HUD.

    (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 Secretary. If the material or literature 
consists of more than one page, it shall appear at the bottom of

[[Page 69]]

the front page. The disclaimer statement shall be set in type of at 
least ten point font.

    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.

    (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.



PART 1720--FORMAL PROCEDURES AND RULES OF PRACTICE--Table of Contents




                     Subpart A--Rules and Rulemaking

Sec.
1720.1  Scope of rules in this subpart.
1720.5  Initiation of rulemaking.
1720.10  Investigations and conferences.
1720.15  Notice.
1720.20  Promulgation of rules and regulations.
1720.25  Effective date of rules and regulations.

                      Subpart B--Filing Assistance

1720.30  Scope of this subpart.
1720.35  Prefiling assistance.
1720.40  Processing of filings.

Subpart C  [Reserved]

                   Subpart D--Adjudicatory Proceedings

                           General Provisions

1720.105  Scope of rules in this subpart.
1720.110  Applicability of sections of this subpart.
1720.115  Department representative.
1720.120  Qualification for appearances.
1720.125  Public nature and timing of hearings.
1720.130  Restrictions on appearances as to former officers and 
          employees.
1720.135  Standards of practice.
1720.140  Administrative law judge, powers and duties.
1720.145  Disqualification of administrative law judge.
1720.150  Failure to comply with administrative law judge's directions.
1720.155  Ex parte communications.
1720.160  Form and filing requirements.
1720.165  Time computation.
1720.170  Service.
1720.175  Intervention by interested persons.
1720.180  Settlements.

                                Pleadings

1720.205  Suspension notice under Sec. 1710.45(a) of this chapter.
1720.210  Hearings--suspension notice pursuant to Sec. 1710.45(a) of 
          this chapter.
1720.215  Notice of proceedings pursuant to Sec. 1710.45(b)(1) of this 
          chapter.
1720.220  Hearings--notice of proceedings pursuant to Sec. 1710.45(b)(1) 
          of this chapter.
1720.225  Suspension order under Sec. 1710.45(b)(2) of this chapter.
1720.230  Suspension order under Sec. 1710.45(b)(3) of this chapter.
1720.235  Hearings--suspension orders issued pursuant to 
          Secs. 1710.45(b)(2) and 1710.45(b)(3) of this chapter.
1720.236  Notice of proceedings to withdraw a State's certification 
          pursuant to Sec. 1710.505 of this chapter.
1720.237  Hearings--notice of proceedings pursuant to Sec. 1710.505 of 
          this chapter.
1720.238  Notices of proceedings to terminate exemptions pursuant to 
          Secs. 1710.14, 1710.15 and 1710.16 of this chapter.
1720.239  Hearings--notice of proceedings pursuant to Secs. 1710.14, 
          1710.15 and 1710.16 of this chapter.
1720.240  Time for filing answer.
1720.245  Content of answer.
1720.250  Presumption of hearing request.
1720.255  Amendments and supplemental pleadings.
1720.260  Prehearing conferences.
1720.265  Reporting--prehearing conferences.

                                 Motions

1720.305  Motions--filing requirements.
1720.310  Answers to motions.
1720.315  Motions for more definite statement.
1720.320  Motions for extension of time.
1720.325  Motions for dismissal.
1720.330  Motions to limit or quash.
1720.335  Consolidation.

                         Discovery and Evidence

1720.405  Depositions and discovery.
1720.410  Subpoenas ad testificandum.
1720.415  Subpoenas duces tecum.

[[Page 70]]

1720.420  Rulings on applications for compulsory process; appeals.
1720.425  Presentation and admission of evidence.
1720.430  Production of witnesses' statements.
1720.435  Official notice.

                                Hearings

1720.505  Interlocutory review of administrative law judge's decision.
1720.510  Reporting and transcription.
1720.515  Corrections.
1720.520  Proposed findings, conclusions, and order.
1720.525  Decision of administrative law judge.
1720.530  Decision of administrative law judge--content.
1720.535  Reopening of proceeding; termination of jurisdiction.

                                 Appeals

1720.605  Appeal from decision of administrative law judge.
1720.610  Answering brief.
1720.615  Reply brief.
1720.620  Length and form of briefs.
1720.625  Oral argument.
1720.630  Decision on appeal or review.
1720.635  Appeals officer.

    Authority: 15 U.S.C. 1718; 42 U.S.C. 3535(d).

    Source: 43 FR 29496, July 7, 1978, unless otherwise noted.



                     Subpart A--Rules and Rulemaking



Sec. 1720.1  Scope of rules in this subpart.

    The rules in this subpart apply to and govern procedures for the 
promulgation of rules and regulations under the Act. The rules in this 
subpart do not apply to interpretative rules, general statements of 
policy, rules of organization procedure or practice or in any situation 
in which the Secretary for good cause finds (and incorporates the 
findings and brief statement of the reasons therefor in the rules 
issued) that notice and public procedure thereon are impracticable, 
unnecessary or contrary to the public interest.



Sec. 1720.5  Initiation of rulemaking.

    (a) The issuance, amendment or repeal of any rule or regulation may 
be proposed upon the initiative of the Secretary or upon the petition of 
any interested person showing reasonable grounds therefor.
    (b) Petitions for rulemaking by interested persons filed under this 
section:
    (1) Shall be identified as a petition for rulemaking under this 
subpart;
    (2) Shall explain the interest of the petitioner in the action 
requested;
    (3) Shall set forth the text or substance of the rule or amemdment 
proposed or specify the rule that the petitioner seeks to have repealed, 
as the case may be;
    (4) Shall contain any information and arguments available to the 
petitioner to support the action sought; and
    (5) Shall be filed with the Rules Docket Clerk, Office of General 
Counsel, Department of Housing and Urban Development, Room 5218, 451 
Seventh Street SW., Washington, DC 20410.
    (c) The Secretary shall respond to a petition submitted under this 
section within 180 days of receipt thereof, except that this time limit 
may be exceeded for good cause found and communicated to the petitioner. 
The Secretary's normal response shall be to grant or deny the petition 
but alternatively, the Secretary may schedule a public hearing or other 
appropriate proceeding prior to the granting or denial of a petition. If 
the Secretary grants the petition, the Secretary shall publish a 
proposed rule in accordance with the petition and a copy of the proposed 
rule shall be furnished to the petitioner. If the Secretary denies the 
petition, the Secretary shall notify the petitioner within 7 days after 
such denial.



Sec. 1720.10  Investigations and conferences.

    (a) In connection with a rulemaking proceeding, the Secretary may 
conduct such investigations, make such studies, and hold such 
conferences as are necessary. Investigations in connection with a 
rulemaking may be conducted in accordance with the general investigatory 
procedures under part 3800 of this chapter.
    (b) At any such conferences, interested persons may appear to 
express views and suggest amendments relative to proposed rules.

[61 FR 10442, Mar. 13, 1996]

[[Page 71]]



Sec. 1720.15  Notice.

    General notice of proposed rulemaking shall be published in the 
Federal Register and, to the extent practicable, otherwise made 
available to interested persons. Such notice shall state the time, 
place, and nature of public hearings, if any; the authority under which 
the rule or regulation is proposed; either the terms or substance of the 
proposed rule or regulation or a description of the subjects and issues 
involved; and the manner in which interested persons shall be afforded 
the opportunity to participate in the rulemaking. If the rulemaking was 
instituted pursuant to petition, a copy of the notice shall be served on 
the petitioner.



Sec. 1720.20  Promulgation of rules and regulations.

    The Secretary, after consideration of all relevant matters of fact, 
law, policy, and discretion, including all relevant matters presented by 
interested persons in the rulemaking proceedings, shall adopt and 
publish in the Federal Register an appropriate rule or regulation 
together with a concise general statement of its basis and purpose and 
any necessary findings; or the Secretary shall give other appropriate 
public notice of disposition of the rulemaking proceeding.



Sec. 1720.25  Effective date of rules and regulations.

    The effective date of any rule or regulation or of an amendment, 
suspension, or repeal of any rule or regulation shall be specified in a 
notice published in the Federal Register. Such date shall not be less 
than 30 days after the date of such publication unless the Secretary 
specifies an earlier effective date for good cause found and published 
with the rule or regulation.



                      Subpart B--Filing Assistance



Sec. 1720.30  Scope of this subpart.

    The rules in this subpart apply to and govern procedures under which 
developers may obtain prefiling assistance and be notified of and 
permitted to correct deficiencies in the Statement of Record.



Sec. 1720.35  Prefiling assistance.

    Persons intending to file with the Office of Interstate Land Sales 
Registration 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 Administrator, Office of Interstate Land Sales 
Registration, Department of Housing and Urban Development, 451 Seventh 
Street SW., Washington, DC 20410.



Sec. 1720.40  Processing of filings.

    (a) Statements of Record and accompanying filing fees will be 
received on behalf of the Secretary by the Administrator, Office of 
Interstate Land Sales Registration, for determination of:
    (1) Completeness of the statement,
    (2) Adequacy of the filing fee and
    (3) Adequacy of disclosure.

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.
    (b) Filings intended as Statements of Record but which do not comply 
in form with Secs. 1710.105 and 1710.120 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 Administrator, 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. 1710.45(a) of this chapter.

Subpart C  [Reserved]

[[Page 72]]



                   Subpart D--Adjudicatory Proceedings

                           General Provisions



Sec. 1720.105  Scope of rules in this subpart.

    The rules in this subpart are applicable to adjudicative proceedings 
which involve a hearing or opportunity for a hearing under the 
Interstate Land Sales Full Disclosure Act.



Sec. 1720.110  Applicability of sections of this subpart.

    Succeeding sections of this subpart shall apply to all adjudicatory 
hearings conducted by OILSR unless specifically limited in applicability 
by a particular section.



Sec. 1720.115  Department representative.

    In each case heard before an administrative law judge pursuant to 
this part, the Department shall be represented by a Department hearing 
attorney. The General Counsel shall designate one or more attorneys to 
act as Department hearing attorneys.



Sec. 1720.120  Qualification for appearances.

    (a) Members of the bar of a Federal Court or of the highest court of 
any state or of the United States are eligible to practice before the 
Secretary. No register of attorneys will be maintained.
    (b) Any individual or member of a partnership involved in any 
proceeding or investigation may appear on personal behalf or that of the 
partnership upon adequate identification. A corporation or association 
may be represented by a bona fide officer thereof upon a showing of 
adequate authorization.
    (c) A person shall not be represented except as stated in paragraphs 
(a) and (b) of this section unless otherwise permitted.



Sec. 1720.125  Public nature and timing of hearings.

    (a) All hearings in adjudicative proceedings shall be public.
    (b) Hearings shall proceed with all reasonable speed and insofar as 
practicable, shall be held at one place and shall continue without 
recess or suspension until concluded. The administrative law judge shall 
have the authority to order brief intervals of the sort normally 
involved in judicial proceedings and, in unusual and exceptional 
circumstances for good cause stated on the record, shall have the 
authority to order hearings at more than one place and to order recesses 
to permit further gathering of evidence or settlement discussions.



Sec. 1720.130  Restrictions on appearances as to former officers and employees.

    (a) Except as specifically authorized by the Secretary, no former 
officer or employee of the Department of Housing and Urban Development 
shall appear as attorney or counsel or otherwise participate through any 
form of professional consultation or assistance in any proceeding or 
investigation, formal or informal, which was pending in any manner in 
the Office of Interstate Land Sales Registration while such former 
officer or employee served with the Department of Housing and Urban 
Development.
    (b) In cases to which paragraph (a) of this section is applicable, a 
former officer or employee of the Department of Housing and Urban 
Development may request authorization to appear or participate in a 
proceeding or investigation by filing with the Secretary a written 
application disclosing the following relevant information:
    (1) The nature and extent of the former officer's or employee's 
participation in, knowledge of, and connection with the proceeding or 
investigation during service with the Department of Housing and Urban 
Development;
    (2) Whether the files of the proceeding or investigation came to the 
former officer or employee's attention;
    (3) Whether the former officer or employee was employed in the same 
office, division, or administrative unit in which the proceeding or 
investigation is or has been pending;
    (4) Whether the former officer or employee worked directly or in 
close association with the Office of Interstate Land Sales Registration 
personnel assigned to the proceeding or investigation;

[[Page 73]]

    (5) Whether during service with the Department of Housing and Urban 
Development the former officer or employee was engaged in any matter 
concerning the individual, company or industry in the proceeding or 
investigation.
    (c) The requested authorization will not be given in any case:
    (1) Where it appears that the former officer or employee during 
service with the Department of Housing and Urban Development 
participated personally and substantially in the proceeding or 
investigation, or
    (2) Where the application is filed within one (1) year after 
termination of the former officer's or employee's service with the 
Department of Housing and Urban Development and it appears that within a 
period of one (1) year prior to the termination of service the 
proceeding or investigation was within the official responsibility of 
the former officer or employee.

In other cases, authorization will be given where the Secretary is 
satisfied that the appearance or participation will not involve any 
actual conflict of interest or impropriety thereof.
    (d) In any case in which a former officer or employee of the 
Department of Housing and Urban Development is prohibited under this 
section from appearing or participating in a proceeding or 
investigation, any partner or legal or business associate of such former 
officer or employee shall likewise be so prohibited unless:
    (1) Such partner or legal or business associate files with the 
Secretary an affidavit that in connection with the matter the services 
of the disqualified former officer or employee will not be utilized in 
any respect and the matter will not be discussed with the former officer 
or employee in any manner, and that the disqualified former officer or 
employee shall not share, directly or indirectly, in any fees or 
retainers received for services rendered in connection with such 
proceeding or investigation;
    (2) The disqualified former officer or employee files an affidavit 
agreeing not to participate in the matter in any manner, and not to 
discuss it with any person involved in the matter; and
    (3) Upon the basis of such affidavits, the Secretary determines that 
the appearance or participation by the partner or associate would not 
involve any actual conflict of interest or impropriety thereof.



Sec. 1720.135  Standards of practice.

    (a) Attorneys shall conform to the standards of professional and 
ethical conduct required by practitioners in the courts of the United 
States and by the bars of which the attorneys are members.
    (b) The privilege of appearing or practicing may be denied, 
temporarily or permanently, to any person who is found after notice and 
opportunity for hearing which at the person's request or in the 
discretion of the Secretary may be private, and for presentation of oral 
argument in the matter:
    (1) Not to possess the requisite qualifications to represent others, 
or
    (2) To be lacking in character or integrity, or
    (3) To have engaged in unethical or improper professional conduct.
    (c) Contemptuous conduct at any hearing shall be grounds for summary 
exclusion from said hearing for the duration of the hearing.



Sec. 1720.140  Administrative law judge, powers and duties.

    (a) Hearings in adjudicative proceedings shall be presided over by a 
duly qualified administrative law judge who shall be designated by the 
Secretary in a notice to the parties in the proceeding.
    (b) Administrative law judges shall have the duty to conduct fair 
and impartial hearings, to take all necessary action to avoid delay in 
the disposition of proceedings and to maintain order. They shall have 
all powers necessary to those ends including all powers granted under 5 
U.S.C. 556(c), and also power including but not limited to the 
following:
    (1) To administer oaths and affirmations.
    (2) To issue subpoenas and orders requiring access.
    (3) To take or to cause depositions to be taken.
    (4) To rule upon offers of proof and receive evidence.

[[Page 74]]

    (5) To regulate the course of the hearings and the conduct of the 
parties and their counsel.
    (6) To hold conferences for simplification and clarification of the 
issues or any other purpose.
    (7) To consider and rule upon as justice may require, all procedural 
and other motions appropriate in an adjudicative proceeding, including 
motions to open defaults.
    (8) To make and file decisions.
    (9) To certify question to a Departmental appeals officer.
    (10) To take any action authorized by the rules in this part or 
other appropriate action.



Sec. 1720.145  Disqualification of administrative law judge.

    (a) When an administrative law judge feels disqualified from 
presiding in a particular proceeding, the administrative law judge shall 
withdraw therefrom by notice on the record and shall notify the 
Secretary of such withdrawal.
    (b) Whenever any party believes that the administrative law judge 
should be disqualified from presiding, or continuing to preside in a 
particular proceeding, such party may file with the administrative law 
judge a motion that the administrative law judge be disqualified and 
removed. Such motion shall be supported by affidavits setting forth the 
alleged grounds for disqualification. If the administrative law judge 
does not agree to disqualification, the hearing shall proceed, and the 
question of fair hearing and due process may be raised on appeal.



Sec. 1720.150  Failure to comply with administrative law judge's directions.

    Any party who refuses or fails to comply with a lawfully issued 
order or direction of an administrative law judge may be considered to 
be in contempt of the Secretary. The circumstances of any such neglect, 
refusal or failure, together with a recommendation for appropriate 
action, shall be promptly certified by the administrative law judge to 
the Secretary who may make such orders in regard thereto as the 
circumstances may warrant.



Sec. 1720.155  Ex parte communications.

    (a) No person shall communicate with an administrative law judge or 
an appeals officer either directly or indirectly concerning any pending 
proceeding unless prior to or simultaneously with such communication its 
contents are disclosed in detail to all persons interested in the 
proceeding; nor shall an adminstrative law judge or appeals officer 
request or consider any such unauthorized ex parte communication. This 
prohibition shall not apply to a simple request for information 
respecting the status of the proceeding, nor to any ex parte 
communication expressly authorized by these rules.
    (b) Any administrative law judge or appeals officer, who receives an 
ex parte communication which the judge knows or has reason to believe is 
unauthorized, shall promptly place the communication, or its substance, 
in the public file and shall inform all persons interested in the 
proceeding of its existence and general contents. Facts or arguments so 
communicated shall not be taken into account in deciding any matter in 
issue unless such facts or arguments shall be brought properly before 
the administrative law judge.
    (c) Opportunity to answer allegations or contentions contained in an 
unauthorized ex parte communication may be afforded any interested 
person upon motion for leave to do so, wherever such leave will operate 
to assure a fair hearing or decision.



Sec. 1720.160  Form and filing requirements.

    (a) Filing. Except as otherwise permitted, an original and three 
copies of all documents shall be filed with the Docket Clerk for 
Administrative Proceedings, Room 10278, Department of Housing and Urban 
Development, Washington, DC 20410, on official work days between the 
hours of 8:45 a.m. and 5:15 p.m.
    (b) Title. Documents shall show clearly the title of the action, the 
docket number, and OILSR file number in connection with which they are 
filed.
    (c) Form. Except as otherwise permitted, all documents shall be 
printed, typewritten, or otherwise processed in

[[Page 75]]

clear legible form and on good unglazed paper.



Sec. 1720.165  Time computation.

    Computation of any period of time prescribed or allowed by the rules 
and regulations in this part, or by order of the Secretary or of an 
administrative law judge, shall begin with the first business day 
following that on which the act, event, development or default 
initiating such period of time shall have occurred. When the last day of 
the period so computed is a Saturday, Sunday, or national holiday, or 
other day on which the Department of Housing and Urban Development is 
closed, the period shall run until the end of the next following 
business day. Except when any prescribed or allowed period of time is 7 
days or less, each of the Saturdays, Sundays, and national holidays 
shall be included in the computation of the prescribed or allowed 
period.



Sec. 1720.170  Service.

    Notices, orders, processes, determinations and other documents 
required or permitted under these rules may be served as follows:
    (a) Upon the Secretary. By personal delivery at the office, or by 
registered or certified mail addressed to the office of any of the 
following officials in the Office of Interstate Land Sales Registration: 
Administrator; Associate Administrator; Director, Office of Interstate 
Land Sales Registration: Provided, however, That during the pendency of 
a proceeding before the Secretary all pleadings, motions, notices or 
other documents shall be served in accordance with the terms of 
Sec. 1720.160.
    (b) Upon any other person. By delivery of a copy of the documents to 
the person to be served wherever the person may be found, or by leaving 
such copy at the person's office or place of business with a person 
apparently in charge thereof, or, if there is no one in charge or if the 
office is closed or if the person has no office, by leaving a copy at 
the person's residence with some person of suitable age and discretion 
then residing therein, or sending a copy by registered or certified 
mail, return receipt requested, addressed to the person at the person's 
last known residence, or at the person's last known principal office or 
place of business. If the address of the residence, principal office, or 
place of business is unknown and cannot with due diligence be 
ascertained, service may be made by mail to any office at which the 
person to be served is known to be employed or by publication in the 
Federal Register.
    (c) Service on corporations, partnerships, associations, other 
entities. Service may be made upon any corporation, partnership, 
business association or other entity by serving any officer, director, 
partner, trustee, agent for service or managing agent thereof. A 
managing agent, within the meaning of this subsection, is an agent 
having the principal managerial responsibility in connection with the 
regular operation of a distinct office or activity of the enterprise.
    (d) Service through attorney. When a person other than the Secretary 
and the Secretary's staff shall have appeared of record in a proceeding, 
generally or specially, by attorney, all subsequent services of notices, 
orders, processes, and other documents in connection with such 
proceeding may be made upon such person by serving the attorney, except 
that subpoenas and other orders by which such person may be brought in 
contempt shall be served upon the person by one of the methods described 
in paragraphs (b) and (c) of this section. In any case, a copy of any 
document served on a client shall be sent to any attorney who has 
entered an appearance for that client. In such situations, it shall be 
sufficient proof of service to show that either the client or the 
attorney has received a copy of the document.
    (e) Proof of service. Proof of service shall not be required unless 
the fact of service is reasonably put in issue by appropriate motion or 
objection on the part of the person allegedly served or other party. In 
such cases, service may be established by written admission signed by or 
on behalf of the person to be served, or may be established prima facie 
by affidavit or certificate of service or mailing, as appropriate. When 
service is by registered or certified mail, it is complete upon delivery 
of the document by the post office.

[[Page 76]]



Sec. 1720.175  Intervention by interested persons.

    (a) The administrative law judge, upon timely petition in writing 
and for good cause shown, and if deemed to be in the public interest, 
may permit any person to participate by intervention in the proceeding. 
The petition shall state:
    (1) The petitioner's relationship to and interest in the matters 
contained in the proceeding;
    (2) The petitioner's position with respect to each specific issue 
upon which the petitioner proposes to intervene, and the facts which the 
petitioner proposes to adduce in support of each such position; and
    (3) An assent to exercise of jurisdiction by the Department with 
respect to the petitioner.
    (b) The administrative law judge shall determine the propriety of 
such intervention and the extent to which such intervener may 
participate, basing such determination upon applicable law, the 
directness and substantiality of the petitioner's interest in the 
proceeding and the effect upon the proceeding of allowing such 
participation.



Sec. 1720.180  Settlements.

    Parties may propose in writing, at any time during the course of a 
proceeding, offers of settlement which shall be submitted to the 
Secretary. If determined to be appropriate, the party making the offer 
may be given an opportunity to make an oral presentation in support of 
such offer. If an offer of settlement is rejected, the party making the 
offer shall be so notified and the offer shall be deemed withdrawn and 
shall not constitute a part of the record in the proceeding. Final 
acceptance by the Secretary of any offer of settlement will terminate 
any proceeding related thereto upon notification to the administrative 
law judge or the appeals officer.

                                Pleadings



Sec. 1720.205  Suspension notice under Sec. 1710.45(a) of this chapter.

    A suspension pursuant to Sec. 1710.45(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. 1710.45(a) of this chapter, of the suspension, and of the 
additional or corrective procedure, information, documentation, or 
tender which will satisfy the Secretary's requirements.
    (c) A notice of the hearing rights of the developer under 
Sec. 1720.210 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. 1720.210  Hearings--suspension notice pursuant to Sec. 1710.45(a) of this chapter.

    (a) A developer, upon receipt of a suspension notice issued pursuant 
to Sec. 1710.45(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 
Sec. 1720.245. Filing of a motion for a more definite statement pursuant 
to Sec. 1720.315 shall alter the period of time to request a hearing in 
accordance with Sec. 1720.240.
    (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 Secretary 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

[[Page 77]]

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 Secretary 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 Secretary 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. 1710.45(a) with respect to the same matter for which a suspension 
order under Sec. 1710.45(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. 1720.215  Notice of proceedings pursuant to Sec. 1710.45(b)(1) of this chapter.

    A proceeding pursuant to Sec. 1710.45(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. 1710.45(b)(1) of 
this chapter.
    (c) A notice of hearing rights of the developer under Sec. 1720.220 
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 or motion as provided 
under Sec. 1720.240 will result in an order suspending the Statement of 
Record.



Sec. 1720.220  Hearings--notice of proceedings pursuant to Sec. 1710.45(b)(1) of this chapter.

    (a) A developer, upon receipt of a notice of proceedings issued 
pursuant to Sec. 1710.45(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. 1720.245. Filing of a motion for a more definite statement pursuant 
to Sec. 1720.315 shall alter the period of time to request a hearing in 
accordance with Sec. 1720.240.
    (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 Secretary 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 Sec. 1720.140 or 
failure of a developer to appear at a hearing duly scheduled shall 
result in an appropriate order under Sec. 1710.45(b)(1) of this chapter 
suspending the statement of record. Such order shall be effective as of 
the date of service or receipt.



Sec. 1720.225  Suspension order under Sec. 1710.45(b)(2) of this chapter.

    A suspension pursuant to Sec. 1710.45(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. 1720.235 the procedures for invoking those rights.
    (d) A statement that the order shall remain in effect until the 
developer has complied with the Secretary's requirements.

[[Page 78]]



Sec. 1720.230  Suspension order under Sec. 1710.45(b)(3) of this chapter.

    A suspension pursuant to paragraph (b)(3) of Sec. 1710.45 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. 1720.235 and of the procedure for invoking those rights.



Sec. 1720.235  Hearings--suspension orders issued pursuant to Sec. 1710.45(b)(2) and Sec. 1710.45(b)(3) of this chapter.

    (a) A developer, upon receipt of a suspension order issued pursuant 
to Sec. 1710.45(b)(2) or Sec. 1710.45(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. 1720.245. Filing of a motion for a more definite 
statement pursuant to Sec. 1720.315 shall alter the period of time to 
request a hearing in accordance with Sec. 1720.240.
    (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. 1720.236  Notice of proceedings to withdraw a State's certification pursuant to Sec. 1710.505 of this chapter.

    A proceeding pursuant to Sec. 1710.505 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 
Secretary's determination, pursuant to Sec. 1710.505, that the State's 
laws, regulations and the administration thereof, taken as a whole, no 
longer meet the requirements of Sec. 1710. 501.
    (c) A notice of hearing rights of the State under Sec. 1720.237 and 
of the procedures for invoking those rights.
    (d) A notice that failure to file an answer or motion as provided 
under Sec. 1720.240 will result in an order suspending the State's 
certification.

[45 FR 40499, June 13, 1980]



Sec. 1720.237  Hearings--notice of proceedings pursuant to Sec. 1710.505 of this chapter.

    (a) A State, upon receipt of a notice of proceedings issued pursuant 
to Sec. 1710.505 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. 1720.245. Filing of a motion for a more definite statement pursuant 
to Sec. 1720.315 shall alter the period of time to request a hearing in 
accordance with Sec. 1720.240.
    (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 Sec. 1720.240 or 
failure to appear at a hearing duly scheduled shall

[[Page 79]]

result in an appropriate order under Sec. 1710.505 of this chapter 
withdrawing the State's certification. Such order shall be effective as 
of the date of service or receipt.

[45 FR 40499, June 13, 1980]



Sec. 1720.238  Notices of proceedings to terminate exemptions pursuant to Secs. 1710.14, 1710.15 and 1710.16 of this chapter.

    A proceeding to terminate a self-determining exemption under 
Sec. 1710.14 or an exemption order under Sec. 1710.15 or Sec. 1710.16 is 
commenced by issuance and service of a notice which shall contain:
    (a) In the case of an exemption under Sec. 1710.14, an 
identification of the developer and subdivision to which this notice 
applies. In the case of an exemption under either Sec. 1710.15 or 
Sec. 1710.16, 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 
Secretary'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. 1720.239 
and of the procedures for invoking those rights.
    (d) A notice that failure to file an answer or motion as provided 
under Sec. 1720.240 will result, in the case of a notice issued under 
Sec. 1710.14, an order terminating eligibility for the exemption, or, in 
the case of a notice issued under either Sec. 1710.15 or Sec. 1710.16, 
an order terminating the exemption order.

[45 FR 40499, June 13, 1980, as amended at 54 FR 40868, Oct. 4, 1989]



Sec. 1720.239  Hearings--notice of proceedings pursuant to Secs. 1710.14, 1710.15 and 1710.16 of this chapter.

    (a) A developer, upon receipt of a notice of proceedings issued 
under Secs. 1710.14, 1710.15 and 1710.16 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 to 
the requirements of Sec. 1720.245. Filing of a motion for a more 
definite statement under Sec. 1720.315 shall alter the period of time to 
request a hearing in accordance with Sec. 1720.240.
    (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 Sec. 1720.240, or 
failure to appear at a duly scheduled hearing shall result in an 
appropriate order under Sec. 1710.14 Sec. 1710,15 or Sec. 1710.16 of 
this chapter terminating the developer's exemption. The order shall be 
effective as of the date of service or receipt.

[45 FR 40500, June 13, 1980, as amended at 54 FR 40868, Oct. 4, 1989]



Sec. 1720.240  Time for filing answer.

    (a) Within 15 days after service of the notice or order, the 
respondent shall mail or submit to the Docket Clerk for Administrative 
Proceedings, Room 10278, Department of Housing and Urban Development, 
Washington, DC 20410, an answer and three copies thereof signed by the 
respondent or attorney. Unless a different time is fixed by the 
Secretary, the filing of a motion for a more definite statement of the 
allegations shall alter the period of time in which to file an answer as 
follows:
    (1) If the motion is denied, the answer shall be filed within 15 
days after service of the denial.
    (2) If the motion is granted in whole or in part, the more definite 
statement of allegations shall be filed after service of the order 
granting the motion and the answer shall be filed within 15 days after 
service of the more definite statement of allegations.
    (b) If a notice or order is amended pursuant to Sec. 1720.255(a), 
the respondent shall have 15 days after service of the amended notice or 
order within which to file an answer.



Sec. 1720.245  Content of answer.

    (a) An answer to a notice or order shall contain:

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    (1) Specific admission, denial or explanation of each fact alleged 
in the notice or, if the respondent is without knowledge thereof, a 
statement to that effect; and
    (2) A brief statement of the facts constituting each defense.
    (b) Allegations not answered in this manner shall be deemed 
admitted.



Sec. 1720.250  Presumption of hearing request.

    When an answer to a suspension notice, a notice of proceedings, or a 
suspension order is timely filed but a respondent has failed 
specifically to request a hearing, the answer shall be deemed to 
constitute such a request.



Sec. 1720.255  Amendments and supplemental pleadings.

    (a) Amendments. Prior to the receipt by the Docket Clerk for 
Administrative Proceedings of an answer to a notice or order, that 
notice or order may be amended as a matter of course. After the receipt 
of an answer, the administrative law judge may allow appropriate 
amendments to pleadings by motion whenever determination of a 
controversy on the merits will be facilitated thereby.
    (b) Variances of proof. When issues not raised by the pleadings but 
reasonably within the scope of the suspension notice or notice of 
proceedings are tried by express or implied consent of the parties, they 
shall be treated in all respects as if they had been raised in the 
pleadings; and such amendments of the pleadings as may be necessary to 
make them conform to the evidence and to raise such issues shall be 
allowed at any time.
    (c) Supplemental pleadings. The administrative law judge may, upon 
reasonable notice and such terms as are just, permit service of a 
supplemental pleading setting forth transactions or events which have 
occurred since the date of the pleading sought to be supplemented and 
which are relevant to any of the issues involved.



Sec. 1720.260  Prehearing conferences.

    (a) Where it will expedite the proceeding, the administrative law 
judge may direct or allow the parties or their representatives to appear 
for a conference to consider:
    (1) Simplification and clarification of the issues;
    (2) Necessity or desirability of amendments to the pleadings;
    (3) Stipulations and admissions of fact and the contents and 
authenticity of documents;
    (4) Expedition in the discovery and presentation of evidence;
    (5) Matters of which official or judicial notice will be taken; and
    (6) Such other matters as may aid in the orderly and expeditious 
disposition of the proceeding, including disclosure of the names of 
witnesses and of documents or other exhibits which will be introduced in 
evidence in the course of the proceeding.

Prior to the conference, the administrative law judge may direct or 
allow the parties or their representatives to file memoranda specifying 
the issues of law and fact to be considered.
    (b) If the circumstances are such that a conference is 
impracticable, the administrative law judge may require the parties to 
correspond for the purpose of accomplishing any of the objectives set 
forth in this section.



Sec. 1720.265  Reporting--prehearing conferences.

    Prehearing conferences shall be stenographically or mechanically 
reported; and the administrative law judge shall prepare and file for 
the record a written summary of the action taken at the conference, 
which shall incorporate any written agreements or stipulations made by 
the parties at the conference or as a result of the conference.

                                 Motions



Sec. 1720.305  Motions--filing requirements.

    During the time a proceeding is before an administrative law judge, 
all motions therein shall be in writing; and, except as otherwise 
provided in this part, a copy of each motion shall be served on the 
other party or parties. Such motions shall be signed, addressed to, 
filed with and ruled upon by the administrative law judge. The 
provisions of this section need not apply

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to motions made during the course of a hearing.



Sec. 1720.310  Answers to motions.

    Within 7 days after service of any written motion, an opposing party 
shall answer or shall be deemed to consent to the granting of the relief 
asked for in the motion. The moving party shall have no right to reply 
except as permitted by the administrative law judge or the appeals 
officer.



Sec. 1720.315  Motion for more definite statement.

    When a respondent is unable to respond to the allegations in a 
suspension notice, a notice of proceedings, or a suspension order, 
because such allegations are vague, unclear or otherwise indefinite, 
motion may be made requesting a more definite statement of the 
allegations before filing an answer. Such motion shall indicate 
specifically in what manner the notice or order is indefinite or 
defective and shall be mailed or submitted to the Docket Clerk for 
Administrative Proceedings, Room 10278, Department of Housing and Urban 
Development, Washington, DC 20410, within five days after service of the 
notice or order.



Sec. 1720.320  Motions for extension of time.

    As a matter of discretion, the administrative law judge or the 
appeals officer may waive the requirements of Sec. 1720.310 as to 
motions for extension of time, and may rule upon such motions ex parte. 
Extensions of time or continuances in any proceeding may be ordered on a 
motion by the administrative law judge or on the motion of either party 
for sufficient cause after the policy of the Secretary under 
Sec. 1720.125 has been considered.



Sec. 1720.325  Motions for dismissal.

    (a) A motion to dismiss may be made at any time until and including 
the fifth day after the close of the case for the reception of evidence.
    (b) When a motion to dismiss, based upon alleged failure to 
establish a prima facie case, is made at the close of the evidence 
offered in support of the notice or order, the administrative law judge 
may defer ruling thereon until the close of the case for the reception 
of evidence.
    (c) When a motion to dismiss is granted so as to terminate entirely 
the proceeding before the administrative law judge, the administrative 
law judge shall file a decision in accordance with the provisions of 
Sec. 1720.525. If such a motion is granted only as to some allegations 
or as to some respondents, the administrative law judge shall enter this 
partial determination on the record and take it into account in the 
decision.



Sec. 1720.330  Motions to limit or quash.

    Any person to whom a subpoena is directed may, prior to the time 
specified therein for compliance, but in no event more than 5 days after 
the date of service of such subpoena, apply to the administrative law 
judge to quash or modify such subpoena, accompanying such application 
with a brief statement of the reasons therefor. The administrative law 
judge shall have the discretion of granting, denying or modifying said 
motion.



Sec. 1720.335  Consolidation.

    When more than one proceeding involves a common question of law or 
fact, the administrative law judge may order a joint hearing of any or 
all of the matters in issue in the proceedings and may make such other 
orders concerning the proceedings as to avoid unnecessary costs or 
delay.

                         Discovery and Evidence



Sec. 1720.405  Depositions and discovery.

    (a) At any time during the course of a proceeding, the 
administrative law judge may discretionally order the taking of a 
deposition and the production of documents by the deponent. Such order 
may be entered upon a showing that the deposition is necessary for the 
purpose of discovery or to preserve relevant evidence. Insofar as 
consistent with considerations of fairness and the requirements of due 
process and the rules of this subpart, a deposition shall not be ordered 
when it appears that it will result in undue burden to any other party 
or in undue delay of the proceeding. Depositions may be taken

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orally or upon written interrogatories and cross-interrogatories.
    (b) Any party desiring to take a deposition shall make application 
in writing to the administrative law judge setting forth the 
justification therefor and the time and place proposed for the taking of 
the deposition. The application shall include also the name and address 
of each proposed deponent and the subject matter concerning which each 
is expected to depose and shall be accompanied by an application for any 
subpoenas desired.
    (c) An order that the administrative law judge may issue for taking 
a deposition shall state the circumstances warranting its being taken, 
and shall designate the time and place and shall show the name and 
address of each person who is expected to appear and the subject matter 
with regard to which each is expected to depose. The time designated 
shall allow not less than 5 days from date of service of the order when 
the deposition is to be taken within the United States, and not less 
than 15 days when the deposition is to be taken elsewhere.
    (d) After an order is served for taking a deposition upon motion 
timely made by any party or by the person to be deposed and for good 
cause shown, the administrative law judge may determine the propriety of 
and issue any of the following orders:
    (1) That the deposition shall not be taken.
    (2) That it may be taken only at some designated place other than 
that stated in the order.
    (3) That it may be taken only on written interrogatories.
    (4) That certain matters shall not be inquired into.
    (5) That the examination shall be held with no one present except 
the parties to the action, their counsel and a person qualified in the 
designated place to administer oaths and affirmations.
    (e) The administrative law judge may make any other order which 
justice requires to protect the party or deponent from annoyance, 
embarrassment or oppression, or to prevent the unnecessary disclosure or 
publication of information contrary to the public interest and beyond 
the requirements of justice in the particular proceeding.
    (f) Each deponent shall be duly sworn, and any adverse party shall 
have the right to cross-examine. Objections to questions or documents 
shall be in short form, stating the grounds of objections relied upon. 
The questions and the anwers, together with all objections made, but 
excluding argument or debate, shall be reduced to writing and certified 
by the person before whom the deposition was taken. Thereafter such 
person shall forward the deposition and one copy thereof to the party at 
whose instance the deposition was taken, and shall forward one copy 
thereof to the representative of each party who was present or 
represented at the taking of the deposition.
    (g) A deposition taken to preserve relevant evidence which any party 
intends to offer in evidence may be corrected in the manner provided by 
Sec. 1720.515. Any such deposition shall, in addition to the other 
required procedures, be read to or by the deponent and be subscribed by 
the deponent if the party intending to offer it in evidence so notifies 
the person before whom the deposition was taken. Subject to appropriate 
rulings on such objections to the questions and answers as were noted at 
the time the deposition was taken or as may be valid when it is offered, 
a deposition taken to preserve relevant evidence, or any part thereof, 
may be used or offered in evidence as against any party who was present 
or represented at the taking of the deposition or who had due notice 
thereof if the administrative law judge finds any of the following:
    (1) That the deponent is dead.
    (2) That the deponent is out of the United States or is located at 
such a distance that attendance would be impractical, unless it appears 
that the absence of the deponent was procured by the party offering the 
deposition.
    (3) That the deponent is unable to attend or testify because of age, 
sickness, infirmity or imprisonment.
    (4) That the party offering the deposition has been unable to 
procure the attendance of the deponent by subpoena.

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    (5) That such exceptional circumstances exist as to make it 
desirable, in the interest of justice and with due regard to the 
importance of presenting the testimony of witnesses orally in open 
hearing, to allow the deposition to be used.



Sec. 1720.410  Subpoenas ad testificandum.

    Application for issuance of a subpoena requiring a person to appear 
and depose or testify at the taking of a deposition or at an 
adjudicative hearing shall be made to the administrative law judge who 
may issue such subpoena.



Sec. 1720.415  Subpoenas duces tecum.

    (a) Application for issuance of a subpoena requiring a person to 
appear and depose or testify and to produce specific documents, papers, 
books, or other physical exhibits at the taking of a deposition, or at a 
prehearing conference, or at an adjudicative hearing shall be made in 
writing to the administrative law judge who may issue such subpoena and 
shall specify as exactly as possible the general relevancy of the 
material and the reasonableness of the scope of the subpoena.
    (b) Subpoenas duces tecum may be used by any party for purposes of 
discovery or for obtaining documents, papers, books, or other physical 
exhibits for use in evidence, or for both purposes. When used for 
discovery purposes a subpoena may require a person to produce and permit 
the inspection and copying of nonprivileged documents, papers, books, or 
other physical exhibits which constitute or contain evidence relevant to 
the subject matter involved and which are in the possession, custody or 
control of such person.



Sec. 1720.420  Rulings on applications for compulsory process; appeals.

    (a) Applications for orders requiring the production of witnesses' 
statements pursuant to the provisions of Sec. 1720.430, applications for 
orders requiring the taking of depositions pursuant to Sec. 1720.405 and 
applications for the issuance of subpoenas pursuant to Secs. 1720.410 
and 1720.415 may be made ex parte, and, if so made, such applications 
and the rulings thereon shall remain ex parte unless otherwise ordered 
by the administrative law judge. Such applications shall be ruled upon 
by the administrative law judge assigned to hear the case or, in the 
event that judge is not available, by another administrative law judge 
designated by the Secretary.
    (b) Appeals to an appeals officer from rulings denying applications 
within the scope of paragraph (a) of this section, or from rulings on 
motions to limit or quash process issued pursuant to such applications 
will be entertained by the appeals officer only upon a showing that the 
ruling complained of involves substantial rights and will materially 
affect the final decision, and that a determiniation of its correctness 
before conclusion of the hearing is essential to serve the interests of 
justice. Such appeals shall be made on the record, shall briefly state 
the grounds relied on and shall be filed within 5 days after notice of 
the ruling complained of. Appeals from denials of ex parte applications 
shall have annexed thereto copies of the applications and rulings 
involved. Any answer to such appeal shall not operate to suspend the 
hearing unless otherwise ordered by the administrative law judge or the 
appeals officer.



Sec. 1720.425  Presentation and admission of evidence.

    (a) All witnesses at a hearing for the purpose of taking evidence 
shall testify under oath or affirmation which shall be administered by 
the administrative law judge. Every party shall have the right to 
present such oral or documentary evidence and to conduct such cross-
examinations as may be required for a full and true disclosure of the 
facts. The administrative law judge shall receive relevant and material 
evidence, rule upon offers of proof and exclude all irrelevant, 
immaterial or unduly repetitious evidence.
    (b) Evidence shall not be excluded merely by application of 
technical rules governing its admissibility, competency, weight or 
foundation in the record; but evidence lacking any significant probative 
value, or substantially tending merely to confuse or extend the record, 
shall be excluded. The

[[Page 84]]

administrative law judge may allow arguments on the admissibility of 
evidence by analogy to the Federal Rules of Evidence currently 
applicable in the United States District Courts of the United States.
    (c) When offered evidence is excluded, the party offering the same 
shall be permitted to state on the record an offer of proof with respect 
thereto and rejected exhibits, adequately marked, shall on request of 
the party offering the same be retained in the record for purposes of 
review. Evidence may be received subject to deferred ruling on 
objections to its admissibility.
    (d) Objections to evidence shall be timely made and shall specify 
the particular ground of objection without argument except as argument 
may be expressly required by the administrative law judge. Formal 
exception to an adverse ruling is unnecessary.



Sec. 1720.430  Production of witnesses' statements.

    After a witness called by the attorney for the Office of Interstate 
Land Sales Registration has given direct testimony in a hearing, any 
other party may request and obtain the production of any statement, or 
part thereof, of such witness pertaining to the witness' direct 
testimony in the possession of the Office of Interstate Land Sales 
Registration, subject, however, to the limitations applicable to the 
production of witnesses' statements under the Jencks Act, 18 U.S.C. 
3500.



Sec. 1720.435  Official notice.

    Official notice may be taken of any material fact which might be 
judicially noticed by a District Court of the United States, any matter 
in the public official records of the Office of Interstate Land Sales 
Registration or any matter which is peculiarly within the knowledge of 
the administrative law judge. When any decision of an administrative law 
judge rests, in whole or in part, upon the taking of official notice of 
a material fact not appearing in evidence of record, opportunity to 
disprove such noticed fact shall be granted any party making timely 
request therefor.

                                Hearings



Sec. 1720.505  Interlocutory review of administrative law judge's decision.

    (a) The appeals officer will not review a ruling of an 
administrative law judge prior to the appeals officer's consideration of 
the entire proceeding in the absence of extraordinary circumstances. 
Except as provided in Sec. 1720.140 an administrative law judge shall 
not certify a ruling for interlocutory review to an appeals officer 
unless a party so requests and the administrative law judge is of the 
opinion and finds either on the record or in writing that:
    (1) A subsequent reversal of the ruling would cause unusual delay or 
expense, taking into consideration the probability of such reversal, or
    (2) Substantial rights are at stake and the final decision might be 
materially affected.
    (b) The certification by the administrative law judge shall be in 
writing and shall specify the material relevant to the ruling involved. 
The appeals officer may decline to consider the ruling certified if the 
officer determines that interlocutory review is not warranted or 
appropriate under the circumstances. If the administrative law judge 
does not certify a matter, a party who had requested certification may 
apply to the appeals officer for review. An application for review shall 
be in writing and shall briefly state the grounds relied on and shall be 
filed within 2 days after notice of the ruling complained of. Review 
will not be granted unless the appeals officer concludes that the 
administrative law judge erred in failing to certify the matter. Unless 
otherwise ordered by the administrative law judge, the hearing shall 
continue whether or not such certification or application is made. 
Failure to request certification or to make such application will not 
waive the right to seek review of the ruling of the administrative law 
judge after the close of the hearing.

[43 FR 29496, July 7, 1978, as amended at 50 FR 10942, Mar. 19, 1985]

[[Page 85]]



Sec. 1720.510  Reporting and transcription.

    Hearings shall be stenographically or mechanically reported and 
transcribed under the supervision of the administrative law judge. The 
original transcript shall be a part of the record and the sole official 
transcript. Copies of transcripts shall be available from the reporter 
at rates not to exceed the maximum rates fixed by contract between the 
Secretary and the reporter.



Sec. 1720.515  Corrections.

    Corrections of the official transcript ordered by the administrative 
law judge shall be included in the record. Corrections shall not be 
ordered by the administrative law judge except upon notice and 
opportunity for the hearing of objections. Such corrections shall be 
made by the reporter by furnishing substitute pages, under the usual 
certificate of the reporter, for insertion in the official record.



Sec. 1720.520  Proposed findings, conclusions, and order.

    The administrative law judge may fix a reasonable time, not to 
exceed 30 days after the close of the evidence, during which any party 
may file with the administrative law judge proposed findings of fact, 
conclusions of law and rules or orders together with briefs in support 
thereof. Such proposals shall be in writing, shall be served upon all 
parties and shall contain adequate references to the record and to 
authorities relied on. The record shall show the administrative law 
judge's ruling on each proposed finding and conclusion, except when the 
rule or order disposing of the proceeding otherwise informs the parties 
of the action taken thereon.



Sec. 1720.525  Decision of administrative law judge.

    (a) The administrative law judge shall make and file a decision 
within 30 days after the close of the taking of evidence in cases in 
which a hearing is held.
    (b) The decision shall be effective 10 days after service upon the 
parties unless a petition for appeal is filed pursuant to Sec. 1720.605 
which shall serve to stay the effectiveness of the decision while the 
appeal procedure is ongoing.



Sec. 1720.530  Decision of administrative law judge--content.

    The administrative law judge's decision shall include a statement 
of:
    (a) Findings, with specific references to principal supporting items 
of evidence in the record and conclusions, as well as the reasons or 
bases therefor, upon all of the material issues of fact, law or 
discretion presented on the record, and
    (b) An appropriate order.

The administrative law judge's decision shall be based upon a 
consideration of the whole record and supported by reliable, probative 
and substantial evidence.



Sec. 1720.535  Reopening of proceeding; termination of jurisdiction.

    (a) At any time prior to the filing of the decision, the 
administrative law judge may reopen the proceeding for the reception of 
further evidence.
    (b) The jurisdiction of the administrative law judge is terminated 
when the decision becomes effective unless and until the proceeding is 
remanded to the judge by the appeals officer or a court of appropriate 
jurisdiction. The administrative law judge may sua sponte or on motion 
of a party file corrections of clerical errors.

                                 Appeals



Sec. 1720.605  Appeal from decision of administrative law judge.

    (a) Petition for appeal. The administrative law judge's decision may 
be appealed by filing a written petition for appeal with the Docket 
Clerk for Administrative Proceedings within 10 days after service of the 
decision appealed from. Copies of the petition for appeal shall be 
served on all interested parties. The petition shall be limited to 
specifying the findings and conclusions to which exceptions are taken, 
together with a summary of the reasons in support of such exceptions.
    (b) Denial of petition. A petition for appeal of the decision of the 
administrative law judge may be denied by the appeals officer. The 
petition shall be ruled on by the appeals officer within

[[Page 86]]

10 days after filing. A denial of the petition shall be final agency 
action and shall render the administrative law judge's decision 
immediately effective.
    (c) Appeal brief. If the appeals officer grants the petition, the 
appeal shall be perfected by filing within 30 days after service of the 
decision granting the petition a brief conforming to Sec. 1720.620. In 
addition, the appellant shall submit a proposed order for the 
consideration of the appeals officer.



Sec. 1720.610  Answering brief.

    Within 20 days after service of an appeal brief upon a party, such 
party may file an answering brief conforming to the requirements of 
Sec. 1720.620.



Sec. 1720.615  Reply brief.

    A brief in reply to an answering brief, limited to rebuttal of 
matters in the answering brief, may be filed and served by a party 
within 7 days after receipt of the answering brief or the day preceding 
oral argument whichever is earlier. No answer to a reply brief will be 
permitted.



Sec. 1720.620  Length and form of briefs.

    No brief shall exceed 60 pages in length except with the permission 
of the administrative law judge or the appeals officer on the Interstate 
Land Sales Board and shall contain, in the order indicated, the 
following:
    (a) The title of the proceeding, file number, the name of the party 
on whose behalf it is submitted and the name and address of the attorney 
in the matter on the front cover or title page.
    (b) Subject index with page references.
    (c) Table of cases alphabetically arranged, statutes, texts, and 
other authorities and materials cited, with page references.
    (d) A concise statement of the facts of the case, without argument.
    (e) A concise statement of the questions sought to be raised.
    (f) The argument, presenting clearly the points of fact and law 
relied upon in support of the position taken on each question with 
specific page references to the record so far as available, and to legal 
authority or other material relied upon in support of statements 
contained in the argument.



Sec. 1720.625  Oral argument.

    Oral arguments will not be heard in cases on appeal to the appeals 
officer unless the officer otherwise orders, and stenographic or 
mechanical record of such oral argument may be made, in the officer's 
discretion. The purpose of oral argument is to emphasize and clarify the 
written argument appearing in the briefs and to answer questions.



Sec. 1720.630  Decision on appeal or review.

    (a) Upon appeal from or review of an administrative law judge's 
decision, the appeals officer will consider such parts of the record as 
are cited or as may be necessary to resolve the issues and, in addition, 
to the extent necessary or desirable, will exercise all the powers which 
could have been exercised had the appeals officer made the initial 
decision. Unless exceptional circumstances are present, however, all 
appeals and reviews will be determined upon the record made before the 
administrative law judge.
    (b) The appeals officer may affirm, reverse, modify, set aside or 
remand for further proceedings, in whole or in part, the administrative 
law judge's decision. The appellate order shall set forth the reasons 
upon which the decision is based.
    (c) In those cases where the appeals officer believes that further 
information or additional arguments of the parties are needed as to the 
form and content of the rule or order to be issued, the appeals officer 
may withhold final decision pending the receipt of such additional 
information or argument under procedures specified.
    (d) The decision of the appeals officer shall be final 10 days after 
service upon the parties.
    (e) The appeals officer shall render a decision within 30 days after 
the date of receipt of the reply brief or the taking of additional 
information and evidence, whichever is later.



Sec. 1720.635  Appeals officer.

    The Secretary shall hear, consider and determine fully and finally 
all appeals from decisions made pursuant to

[[Page 87]]

the rules in this part by the administrative law judge; provided, 
however, that the Secretary may, upon lawful delegation, designate a 
staff member or other person to serve as the appeals officer.

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