[Title 24 CFR ]
[Code of Federal Regulations (annual edition) - April 1, 2012 Edition]
[From the U.S. Government Printing Office]
[[Page i]]
Title 24
Housing and Urban Development
________________________
Part 1700 to End
Revised as of April 1, 2012
Containing a codification of documents of general
applicability and future effect
As of April 1, 2012
Published by the Office of the Federal Register
National Archives and Records Administration as a
Special Edition of the Federal Register
[[Page ii]]
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[[Page iii]]
Table of Contents
Page
Explanation................................................. v
Title 24:
SUBTITLE B--Regulations Relating to Housing and Urban
Development (Continued)
Chapter X--Office of Assistant Secretary for
Housing--Federal Housing Commissioner, Department of
Housing and Urban Development (Interstate Land Sales
Registration Program) 5
Chapter XII--Office of Inspector General, Department
of Housing and Urban Development 87
Chapter XV--Emergency Mortgage Insurance and Loan
Programs, Department of Housing and Urban
Development 105
Chapter XX--Office of Assistant Secretary for
Housing--Federal Housing Commissioner, Department of
Housing and Urban Development 119
Chapter XXIV--Board of Directors of the Hope for
Homeowners Program 425
Chapter XXV--Neighborhood Reinvestment Corporation 439
Finding Aids:
Table of CFR Titles and Chapters........................ 451
Alphabetical List of Agencies Appearing in the CFR...... 471
List of CFR Sections Affected........................... 481
[[Page iv]]
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Cite this Code: CFR
To cite the regulations in
this volume use title,
part and section number.
Thus, 24 CFR 1710.1 refers
to title 24, part 1710,
section 1.
----------------------------
[[Page v]]
EXPLANATION
The Code of Federal Regulations is a codification of the general and
permanent rules published in the Federal Register by the Executive
departments and agencies of the Federal Government. The Code is divided
into 50 titles which represent broad areas subject to Federal
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parts covering specific regulatory areas.
Each volume of the Code is revised at least once each calendar year
and issued on a quarterly basis approximately as follows:
Title 1 through Title 16.................................as of January 1
Title 17 through Title 27..................................as of April 1
Title 28 through Title 41...................................as of July 1
Title 42 through Title 50................................as of October 1
The appropriate revision date is printed on the cover of each
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LEGAL STATUS
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HOW TO USE THE CODE OF FEDERAL REGULATIONS
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OMB CONTROL NUMBERS
The Paperwork Reduction Act of 1980 (Pub. L. 96-511) requires
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collection request.
[[Page vi]]
Many agencies have begun publishing numerous OMB control numbers as
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[[Page vii]]
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Acting Director,
Office of the Federal Register.
April 1, 2012.
[[Page ix]]
THIS TITLE
Title 24--Housing and Urban Development is composed of five volumes.
The first four volumes containing parts 0-199, parts 200-499, parts 500-
699, parts 700-1699, represent the regulations of the Department of
Housing and Urban Development. The fifth volume, containing part 1700 to
end, continues with regulations of the Department of Housing and Urban
Development and also includes regulations of the Board of Directors of
the Hope for Homeowners Program, and the Neighborhood Reinvestment
Corporation. The contents of these volumes represent all current
regulations codified under this title of the CFR as of April 1, 2012.
For this volume, Bonnie Fritts was Chief Editor. The Code of Federal
Regulations publication program is under the direction of Michael L.
White, assisted by Ann Worley.
[[Page 1]]
TITLE 24--HOUSING AND URBAN DEVELOPMENT
(This book contains part 1700 to End)
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SUBTITLE B--Regulations Relating to Housing and Urban Development
(Continued)
Part
chapter x--Office of Assistant Secretary for Housing--
Federal Housing Commissioner, Department of Housing and
Urban Development (Interstate Land Sales Registration
Program).................................................. 1710
chapter xii--Office of Inspector General, Department of
Housing and Urban Development............................. 2002
chapter xv--Emergency Mortgage Insurance and Loan Programs,
Department of Housing and Urban Development............... 2700
chapter xx--Office of Assistant Secretary for Housing--
Federal Housing Commissioner, Department of Housing and
Urban Development......................................... 3280
chapter xxiv--Board of Directors of the Hope for Homeowners
Program................................................... 4001
chapter xxv--Neighborhood Reinvestment Corporation.......... 4100
[[Page 3]]
Subtitle B--Regulations Relating to Housing and Urban Development
(Continued)
[[Page 5]]
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
1700-1709 [Reserved]
1710 Land registration........................... 7
1715 Purchasers' revocation rights, sales
practices and standards................. 64
1720 Formal procedures and rules of practice..... 68
[[Page 7]]
PARTS 1700 1709 [RESERVED]--Table of Contents
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 Sec. Sec. 1710.5 through 1710.15, based on facts
submitted to the Secretary.
[[Page 8]]
Available for use means that in addition to being constructed, the
subject facility is fully operative and supplied with any materials and
staff necessary for its intended purpose.
Beneficial property restrictions means restrictions that are
enforceable by the lot owners and are designed to control the use of the
lot and to preserve or enhance the environment and the aesthetic and
economic value of the subdivision.
Date of filing means the date a Statement of Record, amendment, or
consolidation, accompanied by the applicable fee, is received by the
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 Sec. Sec. 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;
[[Page 9]]
(2) To obtain money or property by means of any untrue statement of
a material fact, or
(3) To omit to state a material fact necessary in order to make the
statements made not misleading, with respect to any information
pertinent to the lot or subdivision; or
(4) To engage in any transaction, practice, or course of business
which operates or would operate as a fraud or deceit upon a purchaser.
(c) The anti-fraud provisions of the Act require that certain
representations be included in the contract in transactions which are
not exempt under Sec. 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 Sec. Sec. 1710.5
through 1710.14 is self-determining. With the exception of the
exemptions available under Sec. Sec. 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]
[[Page 10]]
Sec. 1710.8 Scattered site subdivisions.
(a) The sale of lots in a subdivision consisting of noncontiguous
parts is exempt from the registration requirements of the Act if--
(1) Each noncontiguous part of the subdivision contains twenty or
fewer lots; and
(2) Each purchaser or purchaser's spouse makes a personal, on-the-
lot inspection of the lot purchased prior to signing a contract.
(b) For purposes of this exemption, interruptions such as roads,
parks, small bodies of water or recreational facilities do not serve to
break the contiguity of parts of a subdivision.
(c) The sale must also comply with the anti-fraud provisions of
Sec. 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
[[Page 11]]
the cost of carrying out the responsibility over the first ten years of
ownership.
(5) At the time of closing, potable water, sanitary sewage disposal,
and electricity must be extended to the lot or the unit of local
government must be obligated to install the facilities within 180 days
following closing. For subdivisions which will not have a central water
or sewage disposal system, there must be assurances that an adequate
potable water supply is available year-round and that the lot is
approved for the installation of a septic tank.
(6) The contract of sale must require delivery within 180 days after
the signing of the sales contract of a warranty deed, which at the time
of delivery is free from monetary liens and encumbrances. If a warranty
deed is not commonly used in the jurisdiction where the lot is located,
a deed or grant which warrants that the seller has not conveyed the lot
to another person may be delivered in lieu of a warranty deed. The deed
or grant used must warrant that the lot is free from encumbrances made
by the seller or any other person claiming by, through, or under the
seller.
(7) At the time of closing, a title insurance binder or title
opinion reflecting the condition of title must be in existence and
issued or presented to the purchaser showing that, subject only to
exceptions which are approved in writing by the purchaser at the time of
closing, marketable title to the lot is vested in the seller.
(8) The purchaser or purchaser's spouse must make a personal, on-
the-lot inspection of the lot purchased prior to signing a contract or
agreement to purchase.
(d) The sale must also comply with the anti-fraud provisions of
Sec. 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]
[[Page 12]]
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:
(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
[[Page 13]]
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 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
[[Page 14]]
or group of lots. To be considered beneficial and enforceable, any
restriction or covenant that imposes an assessment on lot owners must
apply to the developer on the same basis as other lot owners. Developers
who maintain control of a subdivision through a Property Owners'
Association, Architectural Control Committee, restrictive covenants, or
otherwise, shall transfer such control to the lot owners no later than
when the developer ceases to own a majority of total lots in, or planned
for, the subdivision. Relinquishment of developer control shall require
affirmative action, usually in the form of an election based upon one
vote per lot.
(vi) Reservations contained in United States land patents and
similar Federal grants or reservations.
(7) Before the sale the developer gives a written MSA Exemption
Statement to the purchaser and obtains a written receipt acknowledging
that the statement was received. A sample MSA Exemption Statement is
included in the exemption guidelines. A State-approved disclosure
document may be used to satisfy this requirement if all of the
information required by this section is included. The statement(s) given
to purchasers must contain neither advertising nor promotion on behalf
of the developer or the subdivision nor references to the 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]
[[Page 15]]
Sec. 1710.14 Regulatory exemptions.
(a) Eligibility requirements. The following transactions are exempt
from the registration requirements of the 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 eligibility for
exemption. The basis for issuing a notice may be the conduct of the
developer or agent, such as unlawful conduct or insolvency, or adverse
information about the lots or real estate that should be disclosed to
the purchasers. Proceedings will be governed by Sec. 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
[[Page 16]]
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 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.
[[Page 17]]
Any development will likely have some impact on the surrounding
environment. Development which adversely affects the environment may
cause governmental agencies to impose restriction on the use of the
land.
In the purchase of real estate, many technical requirements must be
met to assure that you receive proper title and that you will be able to
use the land for its intended purpose. Since this purchase involves a
major expenditure of money, it is recommended that you seek professional
advice before you obligate yourself.
If adequate provisions have not been made for maintenance of the
roads or if the land is not served by publicly maintained roads, you may
have to maintain the roads at your expense.
If the land is not served by a central sewage system and/or water
system, you should contact the local authorities to determine whether a
permit will be given for an on-site sewage disposal system and/or well
and whether there is an adequate supply of water. You should also become
familiar with the requirements for, and the cost of, obtaining
electrical service to the lot.
Developer Information
(Under this heading the developer is to list the following
information:)
Developer's Name:_______________________________________________________
Address:________________________________________________________________
Telephone Number:_______________________________________________________
Lot Information
(Under this heading the developer is to list the following
information:)
Lot Location:___________________________________________________________
(Enter a statement disclosing all liens, reservations, taxes,
assessments, easements and restrictions applicable to the lot. A copy of
the restrictions may be attached in lieu of recitation.)
Suppliers of Utilities and Issuers of Permits
(Under this heading the developer is to list the name, address and
phone number of the appropriate governmental agency or agencies, if any,
that will provide information on permits or other requirements for
water, sewer and electrical installations. The information will also
contain the name, address and telephone number of the suppliers of such
utilities which can provide information to the purchaser on costs and
availability of such services. A chart similar to the one below may be
used to supply this information.
Listed below are contact points for determining permit requirements,
if any, and to obtain information on approximate costs and availability
for the listed services:
------------------------------------------------------------------------
Name, Address and Telephone
Number of
-------------------------------
Governmental
agency Supplier
------------------------------------------------------------------------
Water...................................
Sewer...................................
Electricity.............................
------------------------------------------------------------------------
If misrepresentations are made in the sale of this lot to you, you
may have rights under the Interstate Land Sales Full Disclosure Act. If
you have evidence of any scheme, artifice or device used to defraud you,
you may wish to contact: 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:______________________________________________________________
[[Page 18]]
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.
(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
[[Page 19]]
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_______________________________________________________________
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________________________________________________________
[[Page 20]]
Number of Lots in Subdivision___________________________________________
Number of Acres in Subdivision__________________________________________
I affirm that I am the developer or owner of the property described
above or will be the developer or owner at the time the lots are offered
for sale to the public, or that I am the agent authorized by the
developer or owner to complete this statement.
I further affirm that the statements contained in all documents
submitted with the request for an Advisory Opinion are true and
complete.
________________________________________________________________________
(Date)
________________________________________________________________________
(Signature)
________________________________________________________________________
(Title)
Warning: 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 Sec. Sec. 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 Sec. Sec. 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.
[[Page 21]]
(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.
(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 Documentation portion which contain changes which have
occurred since the last effective submission, and
(2) A recapitulation or listing of each of the section headings, and
subheadings if necessary, of the Additional Information and
Documentation portion. Each item of the listing shall contain a
statement as to whether or not any change is made in the section;
whether any new or additional information is being submitted and, if
documentation is 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
[[Page 22]]
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
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
[[Page 23]]
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 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
[[Page 24]]
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 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
[[Page 25]]
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 8x11 inches in size, will be used for the Property Report
portion and legal size paper, approximately 8\1/2\x14 inches in size,
will be used for the Additional Information and Documentation portion.
Side margins shall be no less than 1 inch and no greater than 1\1/2\
inches. Top and bottom margins shall be no less than 1 inch. In the
preparation of the charts to be included in the Property Report, the
developer may vary from the above margin requirements or print the
charts lengthwise on the required size paper if such measures are
necessary to make the charts readable. The Statement of Record shall be
prepared in an easily readable 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 Sec. Sec. 1710.105 through
1710.118. They shall
[[Page 26]]
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.
Sample Page
roads
Here we discuss the roads that lead to the subdivision, those within
the subdivision and the location of nearby communities.
ACCESS TO THE SUBDIVISION.
County road 43 leads to the subdivision. It has two lanes
and the width of the wearing surface is 22 feet. It's paved with a
macadam surface.
This road is maintained by Bottineau County with County funds. No
improvements are planned at this time.
ACCESS WITHIN THE SUBDIVISION.
The roads within the subdivision will be located on rights of way
dedicated to the public.
We are responsible for constructing the interior roads. There will
be no additional cost to you for this construction.
WE HAVE NOT SET ASIDE ANY FUNDS IN AN ESCROW OR TRUST ACCOUNT OR
MADE ANY OTHER FINANCIAL ARRANGEMENTS TO ASSURE COMPLETION OF THE ROADS,
SO THERE IS NO ASSURANCE WE WILL BE ABLE TO COMPLETE THE ROADS.
At present, the roads are under construction and do not provide
access to the lots in Units 2 and 3 during wet weather. The succeeding
chart describes their present condition and estimated completion dates.
----------------------------------------------------------------------------------------------------------------
Estimated starting Percentage of Estimated
Unit date (month and construction now completion date Present surface Final surface
year) 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 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
[[Page 27]]
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\x14 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 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
[[Page 28]]
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 and 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 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:
[[Page 29]]
(A) A legally sufficient and recordable lot description; and
(B) A provision that the seller will give the purchaser written
notification of purchaser's default or breach of contract and the
opportunity to have at least 20 days from the receipt of notice to
correct the default or breach; and
(C) A provision that, if the purchaser loses rights and interest in
the lot because of the purchaser's default or breach of contract after
15% of the purchase price, exclusive of interest, has been paid, the
seller shall refund to the purchaser any amount which remains from the
payments made after subtracting 15% of the purchase price, exclusive of
interest, or the amount of the seller's actual damages, whichever is the
greater.
(iv) If a deed is not delivered within 180 days of the signing of
the contract or if the necessary provisions are not included in the
contract, the following statement shall be used in place of any other
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 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
[[Page 30]]
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.''
(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'':
[[Page 31]]
``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 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
[[Page 32]]
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 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
[[Page 33]]
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 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
----------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------
[[Page 34]]
(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 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
[[Page 35]]
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.
(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.
[[Page 36]]
(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 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
[[Page 37]]
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 central system? Do these
permits limit the number of connections or homes which the system may
serve? If the permits have not been obtained, enter a warning to the
effect that the necessary permits, approvals or licenses have not been
obtained for the central sewage system; therefore there is no assurance
that the system can be completed, operated or used.
(D) If the system cannot now serve all lots included in the
Statement of Record, either because the supplier of the service has not
stated it can and will serve all lots or if construction has not reached
a stage where all lots can be served or permits to serve all lots have
not been obtained, include a warning which states that all lots cannot
now be served; the number which can be served and the reason for the
lack of capacity.
(E) Will the purchaser pay any construction costs, special
assessments, one time connection fees or availability fees? What are the
amounts of these charges? If the purchaser is to pay construction costs
of the sewer mains, state the cost of installation of the mains to the
most remote lot in this Report.
(F) If the purchaser wishes to use the lot prior to the date central
sewer service is available, may the purchaser install an individual
system? If so, include the information on individual systems required by
Sec. 1710.111(b)(1)(i). Will the purchaser be required to discontinue
use of the individual system and connect to the central system
[[Page 38]]
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 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
[[Page 39]]
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;
(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.
[[Page 40]]
(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 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
[[Page 41]]
the chart, but in place of such assurance on the chart state ``none''.
(6) Buyer's annual cost or assessments. State the lot buyer's annual
cost or assessments for using the facility. These costs should include
any applicable property owners' association assessment, and the
developer's maintenance assessment. If the cost information is lengthy,
you may use an asterisk or other appropriate symbol and include the cost
information in a paragraph below the chart.
(c) Information to be provided below the recreational facility chart
and related warnings.
(1) Constructing the facilities. If the facilities are not complete,
indicate who is responsible for the construction of the facilities.
Indicate whether the purchaser will be required to pay any of the cost
of construction of these facilities (estimate and disclose such cost, if
any).
(2) Maintaining the facilities. Indicate who is responsible for the
operation and maintenance of these facilities.
(3) Facilities which will be leased to lot purchasers. If no
facilities covered here will be leased to a Property Owners' Association
or other lot owners in the subject subdivision, omit this caption and
any information requested under it from the Property Report. If such
leases exist or are anticipated, state which facilities are or will be
leased and indicate the term of the lease. Also, state whether the lot
owners will have an opportunity to terminate or ratify the lease after
control of the Property Owners' Association is turned over to them.
Indicate whether the owner of a recreational facility leased to the
Property Owners' Association or other lot owners may encumber it and
whether the holders of such encumbrances may acquire the leased
facilities and not honor the lease. Indicate whether the lease payments
may be increased on an escalating or other basis and what costs or
expenses, if any, will be borne by the owner. State whether the lease
can be assigned or sublet. State how the lease can be terminated.
(4) Transfer of the facilities. If there are presently any liens or
mortgages on any of these recreational facilities, describe such liens
or mortgages. If the developer, or owner of the subdivision, their
principals, or subsidiaries, intend to transfer the title of a listed
recreational facility in the future, explain at what time, by what type
of conveyance, and to whom such transfer will be made. Disclose any
adverse effects on, or cost to, lot purchasers which may be caused by
such transfer. If any facility is to be transferred to lot owners as a
Property Owners' Association or otherwise, state whether the facility
will be transferred free and clear of all liens and encumbrances. If
not, state the amount of the encumbrance to be assumed and disclose any
contractual conditions on such transfer which relate to lot purchasers.
(5) Permits. If the necessary permits have not been obtained for the
construction and/or use of the facilities, identify the facilities for
which such permits have not been obtained and include the following
statement, or one substantially the same, in the narrative under the
caption ``Permits''.
``The (identify the permit or license) has not been obtained and
therefore there is no assurance that the lot owners will be able to use
the (identify the facility)''.
(6) Who may use the facilities. Indicate who will be permitted to
use the recreational facilities (e.g., lot owners, their guests,
employees of developer, general public, 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
[[Page 42]]
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., unusual or unpleasant noises or odors, pollutants
or nuisances such as existing or proposed industrial activity, military
installations, airports, railroads, truck terminals, race tracks, animal
pens, noxious smoke, chemical fumes, stagnant ponds, marshes,
slaughterhouses and sewage treatment facilities)? If any nuisances
exist, describe them. If there are none, state there are no nuisances
which affect the subdivision.
(g) Hazards. (1) Are there any unusual safety factors which affect
the subdivision (e.g., dilapidated buildings, abandoned mines or wells,
air or vehicular traffic hazards, danger from fire or explosion or
radiation hazards)? Is the developer aware of any proposed plans for
construction which may create a nuisance or safety hazard or adversely
affect the subdivision? If there are any existing hazards or if there is
any proposed construction which will create a nuisance or hazard,
describe the hazard or nuisance. If there are no existing or possible
future hazards, state that there are none.
(2) Is the area subject to natural hazards or has it been formally
identified by any Federal, State or local agency as an area subject to
the frequent occurrence of natural hazards (e.g., tornadoes, hurricanes,
earthquakes, mudslides, forest fires, brush fires, avalanches, flash
flooding, 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?
[[Page 43]]
(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 necessary to continue these functions or
services?
(6) Does the current level of assessments, fees, charges or other
income provide the capability for the association to meet its present,
or planned, financial obligations including operating costs, maintenance
and repair costs and reserves for replacement? If not, how will any
deficit be made up?
(b) Taxes. (1) When will the purchaser's obligation to pay taxes
begin? To whom are the taxes paid? What are the annual taxes on an
unimproved lot after the sale to a purchaser? If the taxes are to paid
to the developer, include a statement that ``Should we not forward the
tax funds to the proper authorities, a tax lien may be placed against
your lot.''
(2) If the subdivision is encompassed within a special improvement
district or if a special district is proposed, describe the purpose of
the district and state the amount of assessments. Describe the
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 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?
[[Page 44]]
(3) Is the developer or any of its principals, any parent
corporation or subsidiary, any officer or director a party to any
litigation which may have a material adverse impact upon its financial
condition or its ability to transfer title to a purchaser or to complete
promised facilities? If so, include a warning which describes the
possible effects which the action may have upon the subdivision.
(d) Resale or exchange program. (1) Are there restrictions which
might hinder lot owners in the resale of their lots (e.g., a prohibition
against posting signs, limitations on access to the subdivision by
outside brokers or prospective buyers; the developer's right of first
refusal; membership requirements)? If so, briefly explain the
restrictions.
(2) Does the developer have an active resale program? If the answer
is ``no'', include the following statement: ``We have no program to
assist you in the sale of your lot.''
(3) Does the developer have a lot exchange program? If the answer is
``yes'', describe the program; state any conditions and indicate if the
program reserves a sufficient number of lots to accommodate all those
wishing to participate. If there is no program or if sufficient lots are
not reserved, include one of the following statements as applicable:
``We do not have any provision to allow you to exchange one lot for
another'' or ``We do not have a program which assures that you will be
able to exchange your lot for another.''
(e) Unusual situations. This topic need appear only if one or more
of the following cases apply to the subdivision, then only the
applicable subject, or subjects, will appear.
(1) Leases. What is the term of the lease? Is it renewable? Is it
recordable? Can creditors of the developer, or owner, acquire title to
the property without any obligation to honor the terms of the lease? Are
the lease payments a flat sum or are they graduated? Can the lessee
mortgage or otherwise encumber the leasehold? Will the lessee be
permitted to remove any improvements which have been installed when the
lease expires or is terminated?
(2) Foreign subdivision. (i) Is the owner or developer of the
subdivision a foreign country corporation? If legal action is necessary
to enforce the contract, must it be taken in the courts of the country
where the subdivision is located?
(ii) Does the country in which the subdivision is located have any
laws which restrict, in any way, the ownership of land by aliens? If so,
what are the restrictions?
(iii) Must an alien obtain a permit or license to own land, build a
home, live, work or do business in the country where the subdivision is
located? If so, where is such permit or license secured; for how long is
it valid and what is its cost?
(3) Time sharing. (i) How is title to be conveyed? How many shares
will be sold in each lot? How is use time allocated? How are taxes,
maintenance and utility expenses divided and billed? How are voting
rights in any Association apportioned? Are there management fees? If so,
what are their amounts and how are they apportioned?
(ii) Is conveyance of any portion of the lot contingent upon the
sale of the remaining portions? Is the initial buyer responsible for any
greater portion of the expense than his normal share until the remaining
interests are sold? If the purchase of any of the portions is financed,
will the default of one owner have any effect upon the remaining owners?
(4) Memberships. (i) Does the purchaser receive any interest in
title to the land? What is the term of the membership? Is it renewable?
What disposition is made of the membership in the event of the death of
the member? Are the lots individually surveyed and the corners marked?
If not, how does the member identify the area which the member is
entitled to use? What is the approximate square footage the member is
entitled to use? Are there different classes of membership? How are the
different classes identified and what are the differences between them?
(ii) If the member does not receive any interest in the title to the
land, include a warning to the effect that ``you receive no interest in
the title to the
[[Page 45]]
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 addition to the purchase price of your lot, there are other
expenditures which must be made.
Listed below are the major costs. There may be other fees for use of
the recreational facilities.
All costs are subject to change.
Sales Price
Cash Price of lot........................................... $.........
......
Finance Charge.............................................. $.........
......
-----------
Total................................................. $.........
......
===========
Estimated one-time charges
1. Water connection fee/installation or private well........ $.........
......
2. Sewer connection fee/installation of private on-site $.........
sewer system............................................... ......
3. Construction costs to extend electric and/or telephone $.........
services................................................... ......
4. Other (Identify)......................................... $.........
......
-----------
$.........
......
===========
Total of estimated sales price and one-time charges... $.........
......
===========
Estimated monthly/annual charges, exclusive of utility use fees
1. Taxes--Average unimproved lot after sale to purchaser.... $.........
......
2. Dues and assessments..................................... $.........
......
The information contained in this Property Report is an accurate
description of our subdivision and development plans.
________________________________________________________________________
Signature of Senior Executive Officer
(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
[[Page 46]]
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 purposes 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:
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________________________________________________________
[[Page 47]]
________________________________________________________________________
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 Sec. Sec. 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 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
Sec. Sec. 1710.116 and 1710.216.
(b) Subdivision information. (1) If this is a consolidated Statement
of Record,
[[Page 48]]
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 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.
[[Page 49]]
(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 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
[[Page 50]]
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 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
[[Page 51]]
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 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.
[[Page 52]]
(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 easements
affecting any of the lots.
(iv) The plat, or map shall be prepared by a licensed surveyor or
engineer.
(v) If all lots on each page of the plat are not included in the
Statement of Record with which the plat or map is submitted, then the
lots which are to be included in the Statement of Record shall be
identified on the plat or map; a legend describing the method of
identification shall be entered on the face of the plat or map and the
number of lots so identified entered in the lower right hand corner of
the plat map. The Secretary must be able to reconcile the totals of
these numbers with the information given in Sec. Sec. 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 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
[[Page 53]]
effect that the water was found to meet all drinking water standards
required by the state for a public water system.
(5) If any bond, escrow agreement or other financial assurance of
the completion of the central system, including any phases which are to
be constructed in the future, has been posted by the developer or an
entity not regulated by a government agency, furnish a copy of the
document.
(6) Furnish a copy of any permits which have been obtained by the
developer or any entity affiliated with or under the control of the
developer in connection with the construction and operation of the
central system. If a permit is required to install individual wells,
submit a letter from the proper authority which states the requirements
for obtaining the permit and that there is no objection to the use of
individual wells in the subdivision.
(7) Furnish a copy of any membership agreement or contract which
allows or requires lot owners to use the central water system. If this
document is furnished elsewhere in the Statement of Record, reference to
it may be made here.
(b) Sewer. (1) State the estimated cost to the developer of the
central sewer system.
(2) If sewage disposal is to be by individual on-site systems,
furnish a letter from the local health authorities giving general
approval to the use of these systems in the subdivision or giving
specific approval for each and every lot.
(3) If sewage disposal is to be through a central system which is
owned and operated by a governmental division, or by an entity whose
operations are regulated by a governmental agency but which is not
affiliated with, or under the control of, the developer, furnish a
letter from the entity that it will provide this service and that its
treatment facilities have the capacity to serve the anticipated
population of the subdivision or how many homes or connections it can
and will serve.
(4) Furnish a copy of any permits obtained by the developer or any
entity affiliated with or under the control of the developer, for the
construction and operation of the central sewer system or construction
and use of any other method of sewage disposal contemplated for the
subdivision except those to be obtained by individual lot owners at a
later date.
(5) If any bond, escrow agreement or other financial assurance of
the completion of the central system or other system for which the
developer is responsible, and any future expansion, has been posted,
furnish a copy of the document.
(6) Furnish a copy of any membership agreement of contract which
allows, or requires, the lot owners to use the central system. If this
document is furnished elsewhere in the Statement of Record, it may be
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
[[Page 54]]
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 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
[[Page 55]]
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 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,
[[Page 56]]
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 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.
[[Page 57]]
(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 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,
[[Page 58]]
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 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
[[Page 59]]
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.
(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
[[Page 60]]
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 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.
[[Page 61]]
(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 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
[[Page 62]]
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 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 Sec. Sec. 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.
[[Page 63]]
(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 (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.''
[[Page 64]]
(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:
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.
[[Page 65]]
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 Sec. Sec. 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.
(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
[[Page 66]]
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 Sec. Sec. 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 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
[[Page 67]]
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 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.
[[Page 68]]
(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 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.
[[Page 69]]
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 Sec. Sec.
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
Sec. Sec. 1710.14, 1710.15 and 1710.16 of this chapter.
1720.239 Hearings--notice of proceedings pursuant to Sec. Sec. 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.
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
[[Page 70]]
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]
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.
[[Page 71]]
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 Sec. Sec. 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]
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.
[[Page 72]]
(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;
(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
[[Page 73]]
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.
(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
[[Page 74]]
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 administrative 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 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
[[Page 75]]
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.
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.
[[Page 76]]
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 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
[[Page 77]]
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.
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
[[Page 78]]
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 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 Sec. Sec. 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 Sec.
Sec. 1710.14, 1710.15 and 1710.16 of this chapter.
(a) A developer, upon receipt of a notice of proceedings issued
under Sec. Sec. 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
[[Page 79]]
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:
(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.
[[Page 80]]
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 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
[[Page 81]]
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 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
[[Page 82]]
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.
(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
Sec. Sec. 1720.410 and 1720.415 may be made ex
[[Page 83]]
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 determination 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 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.
[[Page 84]]
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]
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
[[Page 85]]
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 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
[[Page 86]]
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 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.
[[Page 87]]
CHAPTER XII--OFFICE OF INSPECTOR GENERAL, DEPARTMENT OF HOUSING AND
URBAN DEVELOPMENT
--------------------------------------------------------------------
Part Page
2000-2001 [Reserved]
2002 Availability of information to the public... 89
2003 Implementation of the Privacy Act of 1974... 95
2004 Subpoenas and production in response to
subpoenas or demands of courts or other
authorities............................. 98
[[Page 89]]
PARTS 2000 2001 [RESERVED]
PART 2002_AVAILABILITY OF INFORMATION TO THE PUBLIC--Table of Contents
Sec.
2002.1 Scope of the part and applicability of other HUD regulations.
2002.3 OIG's overall policy concerning discloseable records and requests
for OIG records.
2002.5 Records produced upon request when reasonably described.
2002.7 OIG processing of requests.
2002.9 Where to review records.
2002.11 Review of records, aggregating requests and waiving or reducing
fees.
2002.13 Charges for interest and for unsuccessful searches; utilization
of Debt Collection Act.
2002.15 Advance payments.
2002.17 Time limitations.
2002.19 Authority to release records or copies.
2002.21 Authority to deny requests for records and form of denial.
2002.23 Effect of denial of request.
2002.25 Administrative review.
Authority: 5 U.S.C. 552; Electronic Freedom of Information Act (Pub.
L. 104-231); Freedom of Information Reform Act of 1986 (Pub. L. 99-579);
5 U.S.C. App. 3 (Inspector General Act of 1978); 42 U.S.C. 3535(d);
Delegation of Authority, Jan. 9, 1981 (46 FR 2389).
Source: 49 FR 11165, Mar. 26, 1984, unless otherwise noted.
Sec. 2002.1 Scope of the part and applicability of other HUD regulations.
(a) General. This part contains the regulations of the Office of
Inspector General which implement the Freedom of Information Act (5
U.S.C. 552). It informs the public how to request records and
information from the Office of Inspector General and explains the
procedure to use if a request is denied. Requests for documents made by
subpoena or other order are governed by procedures contained in part
2004 of this chapter. In addition to the regulations in this part, the
following provisions of part 15 of this title covering the production or
disclosure of material or information apply (except as limited in
paragraph (b) of this section) to the production or disclosure of
material in the possession of the Office of Inspector General:
Sec. 15.2--What definitions apply to this part?
Sec. 15.3--What exemptions are authorized by 5 U.S.C. 552?;
Sec. 15.108--What are HUD's policies concerning designating
confidential commercial or financial information under Exemption 4 of
the FOIA and responding to requests for business information?
Sec. 15.110--What fees will HUD charge?
(b) Limited applicability of section 15.110. For purposes of this
part, paragraphs (d) through (k) of Sec. 15.110 are not applicable.
(c) Use of the term ``HUD''. For purposes of this part, and when the
words ``HUD'' or ``Department'' are used in this part or Sec. Sec.
15.2(b), 15.3, 15.108 and 15.110 of this title, the term means the
Office of the Inspector General.
(d) Request for declassification and release of classified material.
Section 15.107 of this title contains provisions for requesting
declassification and release of declassified material.
[67 FR 47216, July 17, 2002]
Sec. 2002.3 OIG's overall policy concerning discloseable records
and requests for OIG records.
(a) The Office of Inspector General will fully and responsibly
disclose its identifiable records and information consistent with
competing public interests, such as national security, personal privacy,
grand jury and investigative secrecy, complainant confidentiality,
agency deliberative process, as are recognized by FOIA and other federal
statutes.
(b) A request for Office of Inspector General records may be made in
person during normal business hours at any office where Office of
Inspector General employees are permanently stationed. Although oral
requests may be honored, a requester may be asked to submit the request
in writing. A written request shall be addressed to: The Office of
Inspector General, Department of Housing and Urban Development, 451
Seventh Street, SW, Room 8260, Washington, DC 20410.
(c) Each request must reasonably describe the desired record
including the name, subject matter, and number or date, where possible,
so that the record
[[Page 90]]
may be identified and located. The request should also include the name,
address and telephone number of the requester, and the format in which
the requester would like the desired record to be reproduced. In order
to enable the Office of Inspector General to comply with the time
limitations set forth in Sec. 2002.17, both the envelope containing a
written request and the letter itself should clearly indicate that the
subject is a Freedom of Information Act request.
(d) The request must be accompanied by the fee or an offer to pay
the fee as determined in Sec. 15.110.
(e) Copies of available records will be made as promptly as
possible. Copying service will be limited to not more than 10 copies of
any single page. Records that are published or available for sale need
not be reproduced.
(f) To the extent that records are readily reproducible, the Office
of Inspector General will send records in the form requested, including
electronic format.
[67 FR 47217, July 17, 2002]
Sec. 2002.5 Records produced upon request when reasonably described.
(a) When a request is made which reasonably describes a record of
the Office of Inspector General (see Sec. 2002.3) which has been stored
in the National Archives or other record center of the General Services
Administration, the record will be requested by the Office of Inspector
General if it otherwise would be available under this part.
(b) Every effort will be made to make a record in use by the staff
of the Office of Inspector General available when requested, and such
availability will be deferred only to the extent necessary to avoid
serious interference with the business of the Office of Inspector
General.
Sec. 2002.7 OIG processing of requests.
(a) Multitracking. (1) The Office of Inspector General places each
request in one of two tracks. The Office of Inspector General places
requests in its simple or complex track based on the amount of work and
time involved in processing the request. Factors the Office of Inspector
General will consider in assigning a request in the simple or complex
track will include whether the request involves the processing of
voluminous documents and/or whether the request involves responsive
documents from more than one organizational unit. Within each track, the
Office of Inspector General processes requests in the order in which
they are received.
(2) For requests that have been sent to the wrong office, the Office
of Inspector General will assign the request within each track using the
earlier of either:
(i) The date on which the request was referred to the appropriate
office; or,
(ii) The end of the ten (10) working day period in which the request
should have been referred to the appropriate office.
(b) Expedited processing. The Office of Inspector General may take
your request or appeal out of normal order if the Office of Inspector
General determines that you have a compelling need for the records or in
other cases as determined by the Office of Inspector General. If the
Office of Inspector General grants your request for expedited
processing, the Office of Inspector General will give your request
priority and will process it as soon as practicable. The Office of
Inspector General will consider a compelling need to exist if:
(1) Your failure to obtain the requested records on an expedited
basis could reasonably be expected to pose an imminent threat to the
life or physical safety of an individual or a threatened loss of
substantial due process rights; or,
(2) You are primarily engaged in disseminating information and there
is an urgency to inform the public concerning actual or alleged Federal
Government activity.
[67 FR 47217, July 17, 2002]
Sec. 2002.9 Where to review records.
(a) You may inspect and copy hardcopy records that section 552(a)(2)
of FOIA requires the Office of Inspector General make available to the
public in reading rooms. At the Headquarters and DC Offices, this would
be at HUD's Library, Room 8141, 451 Seventh St., SW, Washington, DC
20410, and should be coordinated through Counsel's Office to the
Inspector General, Room
[[Page 91]]
8260. Local offices may coordinate for local requests.
(b) For records created on or after November 1, 1996, this
information is available to you through the Office of Inspector
General's Internet website at http://www.hud.gov/oig/oigindex.html.
[67 FR 47217, July 17, 2002]
Sec. 2002.11 Review of records, aggregating requests and waiving or
reducing fees.
(a) Review of records. Only requesters who are seeking documents for
commercial use may be charged for the time HUD spends reviewing records
to determine whether they are exempt from mandatory disclosure. Charges
may be assessed only for the initial review (i.e., the review undertaken
the first time HUD analyzes the applicability of a specific exemption to
a particular record or portion of a record). HUD will not charge for
review at the administrative appeal level of an exemption already
applied. However, records or portions of records withheld in full under
an exemption which is subsequently determined not to apply may be
reviewed again to determine the applicability of other exemptions not
previously considered. The costs for such a subsequent review would be
properly assessable. Review time will be assessed at the same rates
established for search time in Sec. 15.110 of this title.
(b) Aggregating requests. A requester may not file multiple requests
at the same time, each seeking portions of a document or documents,
solely in order to avoid payment of fees. When HUD reasonably believes
that a requester or a group of requesters acting in concert, is
attempting to break a request down into a series of requests for the
purpose of evading the assessment of fees, HUD may aggregate any such
requests and charge accordingly.
(c) Waiving or reducing fees. HUD will furnish documents without
charge or at reduced charge if disclosure of the information is in the
public interest because it is likely to contribute significantly to
public understanding of the operations or activities of the government
and is not primarily in the commercial interest of the requester. The
official authorized to grant access to records may waive or reduce the
applicable fee where requested. The determination not to waive or reduce
the fee will be subject to administrative review as provided in Sec.
2002.25 after the decision on the request for access has been made. Six
factors shall be used in determining whether the requirements for a fee
waiver or reduction are met. These factors are as follows:
(1) The subject of the request: Whether the subject of the requested
records concerns ``the operations or activities of the government'';
(2) The informative value of the information to be disclosed:
Whether the disclosure is ``likely to contribute'' to an understanding
of government operations or activities;
(3) The contribution to an understanding of the subject by the
general public likely to result from disclosure: Whether disclosure of
the requested information will contribute to ``public understanding'';
(4) The significance of the contribution to public understanding:
Whether the disclosure is likely to contribute ``significantly'' to
public understanding of government operations or activities;
(5) The existence and magnitude of a commercial interest: Whether
the requester has a commercial interest that would be furthered by the
requested disclosure; and, if so
(6) The primary interest in disclosure: Whether the magnitude of the
identified commercial interest of the requester is sufficiently large,
in comparison with the public interest in disclosure, that disclosure is
``primarily in the commercial interest of the requester.''
[53 FR 37551, Sept. 27, 1988, as amended at 67 FR 47217, July 17, 2002]
Sec. 2002.13 Charges for interest and for unsuccessful searches;
utilization of Debt Collection Act.
(a) Charging interest. HUD will begin assessing interest charges on
an unpaid bill starting on the 31st day following the day on which the
billing was sent. A fee received by HUD, even if not processed, will
suffice to stay the accrual of interest. Interest will be at the rate
prescribed in section 3717 of title 31 U.S.C. and will accrue from the
date of the billing.
[[Page 92]]
(b) Charge for unsuccessful search. Ordinarily no charge for search
time will be assessed when the records requested are not found or when
the records located are withheld as exempt. However, if the requester
has been notified of the estimated cost of the search time and has been
advised specifically that the requested records may not exist or may be
withheld as exempt, fees shall be charged.
(c) Use of Debt Collection Act of 1982. When a requester has failed
to pay a fee charged in a timely fashion (i.e., within 30 days of the
date of the billing), HUD may, under the authority of the Debt
Collection Act and part 17, subpart C of this title, use consumer
reporting agencies and collection agencies, where appropriate, to
recover the indebtedness owed the Department.
[53 FR 37552, Sept. 27, 1988]
Sec. 2002.15 Advance payments.
(a) HUD may not require a requester to make an advance payment,
i.e., payment before work is commenced or continued on a request,
unless:
(1) HUD estimates or determines that allowable charges that a
requester may be required to pay are likely to exceed $250. Then, HUD
will notify the requester of the likely cost and obtain satisfactory
assurance of full payment where the requester has a history of prompt
payment of FOIA fees, or require an advance payment of an amount up to
the full estimated charges in the case of requesters with no history of
payment; or
(2) Where a requester has previously failed to pay a fee charged in
a timely fashion (i.e., within 30 days of the date of the billing), HUD
may require the requester to pay the full amount owed plus any
applicable interest as provided by Sec. 2002.13(a) or demonstrate that
he has, in fact, paid the fees, and to make an advance payment of the
full amount of the estimated fee before HUD begins to process a new
request or a pending request from that requester.
(b) When HUD acts under paragraph (a)(1) or (a)(2) of this section,
the administrative time limits prescribed in subsection (a)(6) of the
FOIA (i.e., 20 working days from receipt of initial requests and 20
working days from receipt of appeals from initial denial, plus
permissible extensions of these time limits) will begin only after HUD
has received fee payments described in paragraph (a) of this section.
(c) Where it is anticipated that either the duplication fee
individually, the search fee individually, or a combination of the two
exceeds $25.00 over and above the free search time and duplication
costs, where applicable, and the requesting party has not indicated in
advance a willingness to pay so high a fee, the requesting party shall
be promptly informed of the amount of the anticipated fee or such
portion thereof as can readily be estimated. The notification shall
offer the requesting party the opportunity to confer with agency
representatives for the purpose of reformulating the request so as to
meet that party's needs at a reduced cost.
[53 FR 37552, Sept. 27, 1988, as amended at 67 FR 47217, July 17, 2002]
Sec. 2002.17 Time limitations.
(a) Upon receipt of a request for records, the appropriate Assistant
Inspector General or an appointed designee will determine within twenty
(20) working days whether to grant the request. The Assistant Inspector
General or designee will notify the requestor immediately in writing of
the determination and the right of the person to request a review by the
Inspector General of an adverse determination.
(b) The time of receipt for processing a request for records
purposes is the time it is received by the appropriate office for
review. If a request is misdirected by the requester, the Office of
Inspector General or Department official who receives the request will
promptly refer it to the appropriate office and will advise the
requester about the delayed time of receipt.
(c) A determination with respect to a request for review by the
Inspector General of HUD under Sec. 2002.25 will be made within 20
working days after receipt and will be communicated immediately to the
person requesting review.
(d) If the Office of Inspector General grants the request for
records, the records will be made available promptly to the requester.
[[Page 93]]
(e) In unusual circumstances as specified in this paragraph, and
subject to the concurrence of any Assistant Inspector General or
appointed designee, the time limits prescribed in either paragraph (a)
or (c) of this section may be extended. Any extension will be in writing
to the requester and will include reasons for the extension and the date
on which the disposition of the request will be sent. No extension will
be for more than ten working days. As used in this paragraph, unusual
circumstances means (but only to the extent necessary to the proper
processing of the particular request) that there is a need:
(1) To search for and collect the requested records from field
facilities or other establishments that are separate from the office
processing the request; or
(2) To search for, collect, and appropriately examine a voluminous
amount of separate and distinct records which are demanded in a single
request; or
(3) For consultation, which shall be conducted with all practicable
speed, with another agency having a substantial interest in the
determination of the request or among two or more offices of the Office
of Inspector General having a substantial interest in the subject matter
of the request.
[49 FR 11165, Mar. 26, 1984. Redesignated and amended at 53 FR 37550,
37552, Sept. 27, 1988; 57 FR 2227; Jan. 21, 1992; 59 FR 14097, Mar. 25,
1994; 67 FR 47217, July 17, 2002]
Sec. 2002.19 Authority to release records or copies.
Any Assistant Inspector General or an appointed designee is
authorized to release any record (or copy) pertaining to activities for
which he or she has primary responsibility, unless disclosure is clearly
inappropriate under this part. No authorized person may release records
for which another officer has primary responsibility without the consent
of the officer or his or her designee.
[49 FR 11165, Mar. 26, 1984. Redesignated at 53 FR 37550, Sept. 27,
1988, as amended at 59 FR 14098, Mar. 25, 1994]
Sec. 2002.21 Authority to deny requests for records and form of denial.
(a) An Assistant Inspector General may deny a request for a record.
Any denial will:
(1) Be in writing;
(2) State simply the reasons for the denial;
(3) State that review of the denial by the Inspector General of HUD
may be requested;
(4) Set forth the steps for obtaining review consistent with Sec.
2002.25; and
(5) Be signed by the Assistant Inspector General responsible for the
denial.
(b) The classes of records authorized to be exempted from disclosure
by the Freedom of Information Act (5 U.S.C. 552) are those which concern
matters that are:
(1)(i) Specifically authorized under criteria established by an
executive order to be kept secret in the interest of national defense or
foreign policy; and
(ii) Are in fact properly classified under the cited executive
order;
(2) Related solely to the internal personnel rules and practices of
HUD;
(3) Specifically exempted from disclosure by statute (other than
section 552b of title 5), provided that the statute either:
(i) Requires that the matters be withheld from the public in a
manner that leaves no discretion on the issue; or
(ii) Establishes particular criteria for withholding or refers to
particular types of matters to be withheld;
(4) Trade secrets and commercial or financial information that are
obtained from a person and are privileged or confidential;
(5) Inter-agency or intra-agency memoranda or letters that would not
be available by law to a party other than an agency in litigation with
HUD;
(6) Personnel and medical files and similar files the disclosure of
which would constitute a clearly unwarranted invasion of personal
privacy;
(7) Records or information compiled for law enforcement purposes,
but only to the extent that the production of such law enforcement
records or information:
(i) Could reasonably be expected to interfere with enforcement
proceedings;
[[Page 94]]
(ii) Would deprive a person of a right to a fair trial or an
impartial adjudication;
(iii) Could reasonably be expected to constitute an unwarranted
invasion of personal privacy;
(iv) Could reasonably be expected to disclose the identity of a
confidential source, including a state, local, or foreign agency or
authority, or any private institution which furnished information on a
confidential basis, and, in the case of a record or information compiled
by a criminal law enforcement authority in the course of a criminal
investigation or by an agency conducting a lawful national security
intelligence investigation, information furnished by a confidential
source;
(v) Would disclose techniques and procedures for law enforcement
investigations or prosecutions, or would disclose guidelines for law
enforcement investigations or prosecutions if the disclosure could
reasonably be expected to risk circumvention of the law; or
(vi) Could reasonably be expected to endanger the life or physical
safety of any individual;
(8) Contained in or related to examination, operating, or condition
reports prepared by, on behalf of, or for the use of an agency
responsible for the regulation or supervision of financial institutions;
or
(9) Geological and geophysical information and data, including maps,
concerning wells.
(c) With regard to a request for commercial or financial
information, predisclosure notification to business submitters is
required by Executive Order 12600 (3 CFR, 1987 Comp., p. 235) to afford
the business submitter an opportunity to object to disclosure of the
requested information.
(d) Any reasonably segregable portion of a record shall be provided
to any person requesting the record, after deletion of the portions that
are exempt under this section.
[57 FR 2228, Jan. 21, 1992, as amended at 59 FR 14098, Mar. 25, 1994]
Sec. 2002.23 Effect of denial of request.
Denial of a request shall terminate the authority of the Assistant
Inspector General or his or her designee to release or disclose the
requested record, which thereafter may not be made available except with
express authorization of the Inspector General of HUD.
[49 FR 11165, Mar. 26, 1984. Redesignated at 53 FR 37550, Sept. 27,
1988]
Sec. 2002.25 Administrative review.
(a) Review is available only from a written denial of a request for
a record issued under Sec. 2002.21 and only if a written request for
review is filed within 30 days after issuance of the written denial.
(b) A review may be initiated by mailing a request for review to the
Inspector General of HUD, Department of Housing and Urban Development,
451 Seventh Street, SW., Room 8256, Washington, DC 20410. Each request
for review must contain the following:
(1) A copy of the request, if in writing;
(2) A copy of the written denial issued under Sec. 2002.21; and
(3) A statement of the circumstances, reasons, or arguments advanced
in support of disclosure of the original request for the record.
In order to enable the Inspector General of HUD to comply with the time
limitations set forth in Sec. 2002.17, both the envelope containing the
request for review and the letter itself should clearly indicate that
the subject is a Freedom of Information Act request for review.
(c) Review will be made promptly by the Inspector General of HUD on
the basis of the written record described in paragraph (b) of this
section. Before a denial, the Inspector General will obtain the
concurrence of legal counsel for the Office of Inspector General.
(d) The time of receipt for processing of a request for review
purposes is the time it is received by the Inspector General of HUD. If
a request is misdirected by the requester and is received by one other
than the Inspector General, the Office of Inspector General or
Department official who receives the request will forward it promptly to
the Inspector General and will advise the requester about the delayed
time of receipt.
(e) The decision after review will be in writing, will constitute
final agency
[[Page 95]]
action on the request, and, if the denial of the request for records is
in full or in part upheld, the Inspector General will notify the person
making the request of his or her right to seek judicial review under 5
U.S.C. 552(a)(4).
[49 FR 11165, Mar. 26, 1984. Redesignated and amended at 53 FR 37550,
37552, Sept. 27, 1988]
PART 2003_IMPLEMENTATION OF THE PRIVACY ACT OF 1974--Table of Contents
Sec.
2003.1 Scope of the part and applicability of other HUD regulations.
2003.2 Definitions.
2003.3 Requests for records.
2003.4 Officials to receive requests and inquiries.
2003.5 Initial denial of access to records.
2003.6 Disclosure of a record to a person other than the individual to
whom it pertains.
2003.7 Authority to make law enforcement-related requests for records
maintained by other agencies.
2003.8 General exemptions.
2003.9 Specific exemptions.
Authority: 5 U.S.C. 552a; 5 U.S.C. App. 3 (Inspector General Act of
1978); 42 U.S.C. 3535(d).
Source: 57 FR 62142, Dec. 29, 1992, unless otherwise noted.
Sec. 2003.1 Scope of the part and applicability of other HUD regulations.
(a) General. This part contains the regulations of the Office of
Inspector General (``OIG'') implementing the Privacy Act of 1974 (5
U.S.C. 552a). The regulations inform the public that the Inspector
General has the responsibility for carrying out the requirements of the
Privacy Act and for issuing internal OIG orders and directives in
connection with the Privacy Act. These regulations apply to all records
that are contained in systems of records maintained by the OIG and that
are retrieved by an individual's name or personal identifier.
(b) Applicability of part 16. In addition to these regulations, the
provisions of 24 CFR part 16 apply to the OIG, except that appendix A to
part 16 is not applicable. The provisions of this part shall govern in
the event of any conflict with the provisions of part 16.
Sec. 2003.2 Definitions.
For purposes of this part:
Department means the OIG, except that in the context of Sec. Sec.
16.1(d); 16.11(b) (1), (3), and (4); and 16.12(e), when those sections
are incorporated by reference, the term means the Department of Housing
and Urban Development.
Privacy Act Officer means an Assistant Inspector General.
Privacy Appeals Officer means the Inspector General.
[59 FR 14098, Mar. 25, 1994]
Sec. 2003.3 Requests for records.
(a) A request from an individual for an OIG record about that
individual which is not contained in an OIG system of records will be
considered to be a Freedom of Information Act (FOIA) request and will be
processed under 24 CFR part 2002.
(b) A request from an individual for an OIG record about that
individual which is contained in an OIG system of records will be
processed under both the Privacy Act and the FOIA in order to ensure
maximum access under both statutes. This practice will be undertaken
regardless of how an individual characterizes the request.
(1) The procedures for inquiries and requirements for access to
records under the Privacy Act are more specifically set forth in 24 CFR
part 16, except that appendix A to part 16 does not apply to the OIG.
(2) An individual will not be required to state a reason or
otherwise justify his or her request for access to a record.
Sec. 2003.4 Officials to receive requests and inquiries.
Officials to receive requests and inquiries for access to, or
correction of, records in OIG systems of records are the Privacy Act
Officers described in Sec. 2003.2 of this part. Written requests may be
addressed to the appropriate Privacy Act Officer at: Office of Inspector
General, Department of Housing and Urban Development, Washington, DC
20410.
[57 FR 62142, Dec. 29, 1992, as amended at 59 FR 14098, Mar. 25, 1994]
[[Page 96]]
Sec. 2003.5 Initial denial of access to records.
(a) Access by an individual to a record about that individual which
is contained in an OIG system of records will be denied only upon a
determination by the Privacy Act Officer that:
(1) The record was compiled in reasonable anticipation of a civil
action or proceeding; or the record is subject to a Privacy Act
exemption under Sec. 2003.8 or Sec. 2003.9 of this part; and
(2) The record is also subject to a FOIA exemption under Sec.
2002.21(b) of this chapter.
(b) If a request is partially denied, any portions of the responsive
record that can be reasonably segregated will be provided to the
individual after deletion of those portions determined to be exempt.
(c) The provisions of 24 CFR 16.6(b) and 16.7, concerning
notification of an initial denial of access and administrative review of
the initial denial, apply to the OIG, except that:
(1) The final determination of the Inspector General, as Privacy
Appeals Officer for the OIG, will be in writing and will constitute
final action of the Department on a request for access to a record in an
OIG system of records; and
(2) If the denial of the request is in whole or in part upheld, the
final determination of the Inspector General will include notice of the
right to judicial review.
Sec. 2003.6 Disclosure of a record to a person other than the
individual to whom it pertains.
(a) The OIG may disclose an individual's record to a person other
than the individual to whom the record pertains in the following
instances:
(1) Upon written request by the individual, including authorization
under 24 CFR 16.5(e);
(2) With the prior written consent of the individual;
(3) To a parent or legal guardian of the individual under 5 U.S.C.
552a(h); or
(4) When permitted by the provisions of 5 U.S.C. 552a(b) (1) through
(12).
(b) [Reserved]
Sec. 2003.7 Authority to make law enforcement-related requests for
records maintained by other agencies.
(a) The Inspector General is authorized by written delegation from
the Secretary of HUD and under the Inspector General Act to make written
requests under 5 U.S.C. 552a(b)(7) for transfer of records maintained by
other agencies which are necessary to carry out an authorized law
enforcement activity under the Inspector General Act.
(b) The Inspector General delegates the authority under paragraph
(a) of this section to the following OIG officials:
(1) Deputy Inspector General;
(2) Assistant Inspector General for Audit;
(3) Assistant Inspector General for Investigation; and
(4) Assistant Inspector General for Management and Policy.
(c) The officials listed in paragraph (b) of this section may not
redelegate the authority described in paragraph (a) of this section.
Sec. 2003.8 General exemptions.
(a) The systems of records entitled ``Investigative Files of the
Office of Inspector General,'' ``Hotline Complaint Files of the Office
of Inspector General,'' ``Name Indices System of the Office of Inspector
General,'' and ``AutoInvestigation of the Office of Inspector General''
consist, in part, of information compiled by the OIG for the purpose of
criminal law enforcement investigations. Therefore, to the extent that
information in these systems falls within the scope of exemption (j)(2)
of the Privacy Act, 5 U.S.C. 552a(j)(2), these systems of records are
exempt from the requirements of the following subsections of the Privacy
Act, for the reasons stated in paragraphs (a)(1) through (6) of this
section.
(1) From subsection (c)(3), because release of an accounting of
disclosures to an individual who is the subject of an investigation
could reveal the nature and scope of the investigation and could result
in the altering or destruction of evidence, improper influencing of
witnesses, and other evasive actions that could impede or compromise the
investigation.
[[Page 97]]
(2) From subsection (d)(1), because release of investigative records
to an individual who is the subject of an investigation could interfere
with pending or prospective law enforcement proceedings, constitute an
unwarranted invasion of the personal privacy of third parties, reveal
the identity of confidential sources, or reveal sensitive investigative
techniques and procedures.
(3) From subsection (d)(2), because amendment or correction of
investigative records could interfere with pending or prospective law
enforcement proceedings, or could impose an impossible administrative
and investigative burden by requiring the OIG to continuously retrograde
its investigations attempting to resolve questions of accuracy,
relevance, timeliness and completeness.
(4) From subsection (e)(1), because it is often impossible to
determine relevance or necessity of information in the early stages of
an investigation. The value of such information is a question of
judgment and timing; what appears relevant and necessary when collected
may ultimately be evaluated and viewed as irrelevant and unnecessary to
an investigation. In addition, the OIG may obtain information concerning
the violation of laws other than those within the scope of its
jurisdiction. In the interest of effective law enforcement, the OIG
should retain this information because it may aid in establishing
patterns of unlawful activity and provide leads for other law
enforcement agencies. Further, in obtaining evidence during an
investigation, information may be provided to the OIG which relates to
matters incidental to the main purpose of the investigation but which
may be pertinent to the investigative jurisdiction of another agency.
Such information cannot readily be identified.
(5) From subsection (e)(2), because in a law enforcement
investigation it is usually counterproductive to collect information to
the greatest extent practicable directly from the subject thereof. It is
not always feasible to rely upon the subject of an investigation as a
source for information which may implicate him or her in illegal
activities. In addition, collecting information directly from the
subject could seriously compromise an investigation by prematurely
revealing its nature and scope, or could provide the subject with an
opportunity to conceal criminal activities, or intimidate potential
sources, in order to avoid apprehension.
(6) From subsection (e)(3), because providing such notice to the
subject of an investigation, or to other individual sources, could
seriously compromise the investigation by prematurely revealing its
nature and scope, or could inhibit cooperation, permit the subject to
evade apprehension, or cause interference with undercover activities.
(b) [Reserved]
[57 FR 62142, Dec. 29, 1992, as amended at 65 FR 50904, Aug. 21, 2000]
Sec. 2003.9 Specific exemptions.
(a) The systems of records entitled ``Investigative Files of the
Office of Inspector General,'' ``Hotline Complaint Files of the Office
of Inspector General,'' ``Name Indices System of the Office of Inspector
General,'' and ``AutoInvestigation of the Office of Inspector General''
consist, in part, of investigatory material compiled by the OIG for law
enforcement purposes. Therefore, to the extent that information in these
systems falls within the coverage of exemption (k)(2) of the Privacy
Act, 5 U.S.C. 552a(k)(2), these systems of records are exempt from the
requirements of the following subsections of the Privacy Act, for the
reasons stated in paragraphs (a) (1) through (4) of this section.
(1) From subsection (c)(3), because release of an accounting of
disclosures to an individual who is the subject of an investigation
could reveal the nature and scope of the investigation and could result
in the altering or destruction of evidence, improper influencing of
witnesses, and other evasive actions that could impede or compromise the
investigation.
(2) From subsection (d)(1), because release of investigative records
to an individual who is the subject of an investigation could interfere
with pending or prospective law enforcement proceedings, constitute an
unwarranted invasion of the personal privacy of third parties, reveal
the identity of
[[Page 98]]
confidential sources, or reveal sensitive investigative techniques and
procedures.
(3) From subsection (d)(2), because amendment or correction of
investigative records could interfere with pending or prospective law
enforcement proceedings, or could impose an impossible administrative
and investigative burden by requiring the OIG to continuously retrograde
its investigations attempting to resolve questions of accuracy,
relevance, timeliness and completeness.
(4) From subsection (e)(1), because it is often impossible to
determine relevance or necessity of information in the early stages of
an investigation. The value of such information is a question of
judgment and timing; what appears relevant and necessary when collected
may ultimately be evaluated and viewed as irrelevant and unnecessary to
an investigation. In addition, the OIG may obtain information concerning
the violation of laws other than those within the scope of its
jurisdiction. In the interest of effective law enforcement, the OIG
should retain this information because it may aid in establishing
patterns of unlawful activity and provide leads for other law
enforcement agencies. Further, in obtaining evidence during an
investigation, information may be provided to the OIG which relates to
matters incidental to the main purpose of the investigation but which
may be pertinent to the investigative jurisdiction of another agency.
Such information cannot readily be identified.
(b) The systems of records entitled ``Investigative Files of the
Office of Inspector General,'' ``Hotline Complaint Files of the Office
of Inspector General,'' ``Name Indices System of the Office of Inspector
General,'' and ``Autoinvestigation of the Office of Inspector General''
consist in part of investigatory material compiled by the OIG for the
purpose of determining suitability, eligibility, or qualifications for
Federal civilian employment or Federal contracts, the release of which
would reveal the identity of a source who furnished information to the
Government under an express promise that the identity of the source
would be held in confidence. Therefore, to the extent that information
in these systems fall within the coverage of exemption (k)(5) of the
Privacy Act, 5 U.S.C. 552a(k)(5), these systems of records are exempt
from the requirements of subsection (d)(1), because release would reveal
the identity of a source who furnished information to the Government
under an express promise of confidentiality. Revealing the identity of a
confidential source could impede future cooperation by sources, and
could result in harassment or harm to such sources.
[57 FR 62142, Dec. 29, 1992, as amended at 65 FR 50904, Aug. 21, 2000]
PART 2004_SUBPOENAS AND PRODUCTION IN RESPONSE TO SUBPOENAS OR DEMANDS
OF COURTS OR OTHER AUTHORITIES--Table of Contents
Subpart A_General Requirements
Sec.
2004.1 Scope and purpose.
2004.2 Applicability.
2004.3 Definitions.
Subpart B_Office of Inspector General Subpoenas
2004.10 Service of an Office of Inspector General subpoena.
Subpart C_Requests for Testimony and Production of Documents
2004.20 General prohibition.
2004.21 Factors OIG will consider.
2004.22 Filing requirements for demands or requests for documents or
testimony.
2004.23 Service of subpoenas or requests.
2004.24 Processing demands or requests.
2004.25 Final determination.
2004.26 Restrictions that apply to testimony.
2004.27 Restrictions that apply to released records.
2004.28 Procedure in the event of an adverse ruling.
2004.29 Fees.
Authority: Inspector General Act of 1978, as amended (5 U.S.C. app.)
and 42 U.S.C. 3535(d).
Source: 68 FR 3366, Jan. 23, 2003, unless otherwise noted.
[[Page 99]]
Subpart A_General Requirements
Sec. 2004.1 Scope and purpose.
(a) This part sets forth the policy for service of a subpoena issued
by the Office of Inspector General (OIG), and policies and procedures
that you must follow when you submit a demand or request to an employee
of the OIG to produce official records and information, or provide
testimony relating to official information, in connection with a legal
proceeding. You must comply with these requirements when you request the
release or disclosure of official records and information.
(b) The OIG intends these provisions to:
(1) Promote economy and efficiency in its programs and operations;
(2) Minimize the possibility of involving OIG in controversial
issues not related to OIG's functions;
(3) Maintain OIG's impartiality among private litigants where OIG is
not a named party; and
(4) Protect sensitive, confidential information and the deliberative
processes of OIG.
(c) In providing for these requirements, OIG does not waive the
sovereign immunity of the United States.
(d) This part provides guidance for the internal operations of OIG.
This part does not create any right or benefit, substantive or
procedural, that a party may rely upon in any legal proceeding against
the United States.
Sec. 2004.2 Applicability.
This subpart applies to demands and requests to employees for
factual or expert testimony relating to official information, or for
production of official records or information, in legal proceedings in
which HUD or OIG is not a named party. However, this subpart does not
apply to:
(a) Demands upon or requests for an OIG employee to testify as to
facts or events that are unrelated to his or her official duties or that
are unrelated to the functions of OIG;
(b) Requests for the release of records under the Freedom of
Information Act, 5 U.S.C. 552, or the Privacy Act, 5 U.S.C. 552a; and
(c) Congressional demands and Congressional requests for testimony
or records.
Sec. 2004.3 Definitions.
Counsel means the Counsel to the Inspector General.
Demand means a subpoena, or an order or other command of a court or
other competent authority, for the production, disclosure, or release of
records or for the appearance and testimony of an OIG employee that is
issued in a legal proceeding.
Legal proceeding means any matter before a court of law,
administrative board or tribunal, commission, administrative law judge,
hearing officer, or other body that conducts a legal or administrative
proceeding. Legal proceeding includes all phases of litigation.
OIG means the Office of Inspector General, U.S. Department of
Housing and Urban Development.
OIG employee or employee means:
(1) Any current or former officer or employee of OIG;
(2) Any other individual hired through contractual agreement by or
on behalf of OIG or who has performed or is performing services under
such an agreement for OIG; and
(3) Any individual who served or is serving in any consulting or
advisory capacity to OIG, whether formal or informal.
Records or official records or information means:
(1) All documents and materials that are OIG agency records under
the Freedom of Information Act, 5 U.S.C. 552;
(2) All other documents and materials contained in OIG files; and
(3) All other information or materials acquired by an OIG employee
in the performance of his or her official duties or because of his or
her official status.
Request means any informal request, by whatever method, for the
production of records and information or for testimony that has not been
ordered by a court or other competent authority.
Testimony means any written or oral statements, including
depositions, answers to interrogatories, affidavits, declarations,
recorded interviews, and
[[Page 100]]
statements made by an individual in connection with a legal proceeding.
Subpart B_Office of Inspector General Subpoenas
Sec. 2004.10 Service of an Office of Inspector General subpoena.
Service of a subpoena issued by OIG may be accomplished as follows:
(a) Personal service. Service may be made by delivering the subpoena
to the person to whom it is addressed. If the subpoena is addressed to a
corporation or other business entity, it may be served upon an employee
of the corporation or entity. Service made to an employee, agent, or
legal representative of the addressee shall constitute service upon the
addressee.
(b) Service by mail. Service may also be made by mailing the
subpoena, certified mail--return receipt requested, to the addressee at
his or her last known business or personal address.
Subpart C_Requests for Testimony and Production of Documents
Sec. 2004.20 General prohibition.
No employee may produce official records and information or provide
any testimony relating to official information in response to a demand
or request without the prior, written approval of the Inspector General
or the Counsel.
Sec. 2004.21 Factors OIG will consider.
The Counsel or Inspector General, in their discretion, may grant an
employee permission to testify on matters relating to official
information, or produce official records and information, in response to
a demand or request. Among the relevant factors that the Inspector
General or the Counsel may consider in making this decision are whether:
(a) The purposes of this part are met;
(b) OIG has an interest in the decision that may be rendered in the
legal proceeding;
(c) Allowing such testimony or production of records would assist or
hinder OIG in performing its statutory duties or use OIG resources where
responding to the request will interfere with the ability of OIG
employees to do their work;
(d) The records or testimony can be obtained from other sources;
(e) The demand or request is unduly burdensome or otherwise
inappropriate under the applicable rules of discovery or the rules of
procedure governing the case or matter in which the demand or request
arose;
(f) Disclosure would violate or be inconsistent with a statute,
Executive Order, or regulation;
(g) Disclosure would reveal confidential or privileged information,
trade secrets, or similar, confidential commercial, or financial
information;
(h) Disclosure would impede or interfere with an ongoing law
enforcement investigation or proceedings, or compromise constitutional
rights;
(i) Disclosure would result in OIG appearing to favor one litigant
over another;
(j) Disclosure relates to documents that were produced by another
agency;
(k) The demand or request is in conformance with all other
applicable rules;
(l) The demand or request is sufficiently specific to be answered;
and
(m) For any other good cause.
Sec. 2004.22 Filing requirements for demands or requests for
documents or testimony.
You must comply with the following requirements whenever you issue
demands or requests to an OIG employee for official records and
information or testimony.
(a) Your request must be in writing and must be submitted to the
Counsel. If you serve a subpoena on OIG or on an OIG employee before
submitting a written request and receiving a final determination from
the Counsel, OIG will oppose the subpoena on grounds that your request
was not submitted in accordance with this subpart.
(b) Your written request must contain the following information:
(1) The caption of the legal proceeding, docket number, and name and
address of the court or other authority involved;
[[Page 101]]
(2) A copy of the complaint or equivalent document setting forth the
assertions in the case and any other pleading or document sufficient to
show relevance;
(3) A list of categories of records sought, a detailed description
of how the information sought is relevant to the issues in the legal
proceeding, and a specific description of the substance of the testimony
or records sought;
(4) A statement as to how the need for the information outweighs the
need to maintain any confidentiality of the information and outweighs
the burden on OIG to produce the records or provide testimony;
(5) A statement indicating that the information sought is not
available from another source, from other persons or entities, or from
the testimony of someone other than an OIG employee, such as a retained
expert;
(6) If testimony is requested, the intended use of the testimony, a
general summary of the desired testimony, and a showing that no document
could be provided and used in lieu of testimony;
(7) A description of all prior decisions, orders, or pending motions
in the case that bear upon the relevance of the requested records or
testimony;
(8) The name, address, and telephone number of counsel to each party
in the case; and
(9) An estimate of the amount of time that the requester and other
parties will require with each OIG employee for time spent by the
employee to prepare for testimony, in travel, and for attendance in the
legal proceeding.
(c) The OIG reserves the right to require additional information to
complete your request where appropriate.
(d) Your request should be submitted at least 30 days before the
date that records or testimony are required. Requests submitted less
than 30 days before records or testimony are required must be
accompanied by a written explanation stating the reasons for the late
request and the reasons for expedited processing.
(e) Failure to cooperate in good faith to enable the Counsel to make
an informed decision may serve as the basis for a determination not to
comply with your request.
Sec. 2004.23 Service of subpoenas or requests.
Subpoenas or requests for official records or information or
testimony must be served on the Counsel to the Inspector General, Office
of Inspector General, U.S. Department of Housing and Urban Development,
451 Seventh Street, SW, Room 8260, Washington, DC 20410-4500.
Sec. 2004.24 Processing demands or requests.
(a) After service of a demand or request to testify, the Counsel
will review the demand or request and, in accordance with the provisions
of this subpart, determine whether, or under what conditions, to
authorize the employee to testify on matters relating to official
information and/or to produce official records and information.
(b) The OIG will process requests in the order in which they are
received. Absent exigent or unusual circumstances, OIG will respond
within 30 days from the date that we receive all information necessary
to the evaluation of the demand or request. The time for response will
depend upon the scope of the request.
(c) The Counsel may grant a waiver of any procedure described in
this subpart where a waiver is considered necessary to promote a
significant interest of OIG, HUD, and the United States, or for other
good cause.
Sec. 2004.25 Final determination.
The Counsel makes the final determination on demands and requests to
employees for production of official records and information or
testimony. All final determinations are within the sole discretion of
the Counsel. The Counsel will notify the requester of the final
determination, the reasons for the grant or denial of the demand or
request, and any conditions that the Counsel may impose on the release
of records or information, or on the testimony of an OIG employee.
Sec. 2004.26 Restrictions that apply to testimony.
(a) The Counsel may impose conditions or restrictions on the
testimony of OIG employees including, for example, limiting the areas of
testimony or
[[Page 102]]
requiring the requester and other parties to the legal proceeding to
agree that the transcript of the testimony will be kept under seal or
will only be used or made available in the particular legal proceeding
for which testimony was requested. The Counsel may also require a copy
of the transcript of testimony at the requester's expense.
(b) The OIG may offer the employee's written declaration in lieu of
testimony.
(c) If authorized to testify pursuant to this part, an employee may
testify as to facts within his or her personal knowledge, but, unless
specifically authorized to do so by the Counsel, the employee shall not:
(1) Disclose confidential or privileged information;
(2) Testify as to facts when the Counsel determines such testimony
would not be in the best interest of OIG, HUD and the United States; or
(3) Testify as an expert or opinion witness with regard to any
matter arising out of the employee's official duties or the functions of
OIG. This provision does not apply to requests from the United States
for expert or opinion testimony.
Sec. 2004.27 Restrictions that apply to released records.
(a) The Counsel may impose conditions or restrictions on the release
of official records and information, including the requirement that
parties to the proceeding obtain a protective order or execute a
confidentiality agreement to limit access and any further disclosure.
The terms of the protective order or of a confidentiality agreement must
be acceptable to the Counsel. In cases where protective orders or
confidentiality agreements have already been executed, OIG may condition
the release of official records and information on an amendment to the
existing protective order or confidentiality agreement.
(b) If the Counsel so determines, original OIG records may be
presented for examination in response to a demand or request, but they
are not to be presented as evidence or otherwise used in a manner by
which they could lose their identity as official OIG records, nor are
they to be marked or altered. In lieu of the original records, certified
copies will be presented for evidentiary purposes.
Sec. 2004.28 Procedure in the event of an adverse ruling.
(a) Opportunity to review adverse ruling. Any person aggrieved by a
decision made by the Counsel under this part denying a request for
documents or testimony, or restricting the release of documents or
testimony, may seek review of that decision pursuant to paragraph (c) of
this section.
(b) Procedure in the event of conflicting court order. If the
Inspector General or Counsel declines to approve a demand for records or
testimony and a court or other authority rules that the demand must be
complied with irrespective of the instructions from the OIG not to
produce the material or disclose the information sought, the employee or
former employee upon whom the demand has been made shall respectfully
decline to comply with the demand, citing United States ex rel. Touhy v.
Ragen, 340 U.S. 462 (1951).
(c) Procedure--(1) Notice of intention to petition for review. A
party or any person aggrieved by the decision made pursuant to this part
denying or restricting the release of documents or testimony may seek
review of the decision by filing a written Notice of Intention to
Petition for Review (Notice) within five business days of the date of
this decision. The Notice shall identify the petitioner, the adverse
decision, and any dates (such as deposition, hearing, or court dates)
that are significant to the party. The Notice shall be served in
accordance with Sec. 2004.23.
(2) Petition for review. Within five business days of the filing of
a Notice, the person or party seeking review shall file a Petition for
Review (Petition) containing a clear and concise statement of the issues
to be reviewed and the reasons why the review is appropriate. The
petition shall include exceptions to any findings of fact or conclusions
of law made, together with supporting reasons and arguments for such
exceptions based on appropriate citations to such record or law as may
exist. These reasons may be stated in
[[Page 103]]
summary form. Decisions on the Petition may be made by either the
Inspector General or the Counsel and shall become the final decisions of
the OIG. The Petition will be served in accordance with Sec. 2004.23.
(d) Prerequisite to judicial review. Pursuant to Section 704 of the
Administrative Procedure Act, 5 U.S.C. 704, a petition to the agency for
review of a decision made under the authority of this part is a
prerequisite to the seeking of judicial review of the final decision.
[70 FR 36791, June 24, 2005]
Sec. 2004.29 Fees.
(a) Generally. The Counsel may condition the production of records
or appearance for testimony upon advance payment of a reasonable
estimate of the costs to OIG.
(b) Fees for records. Fees for producing records will include fees
for searching, reviewing, and duplicating records, costs of attorney
time spent in reviewing the demand or request, and expenses generated by
materials and equipment used to search for, produce, and copy the
responsive information. Costs for employee time will be calculated on
the basis of the hourly pay of the employee (including all pay,
allowance, and benefits). Fees for duplication will be the same as those
charged by OIG in its Freedom of Information Act Regulations at 24 CFR
part 2002.
(c) Witness fees. Fees for attendance by a witness will include
fees, expenses, and allowances prescribed by the court's rules. If no
such fees are prescribed, witness fees will be determined based upon the
rule of the federal district court closest to the location where the
witness will appear. Such fees will include cost of time spent by the
witness to prepare for testimony, in travel, and for attendance in the
legal proceeding.
(d) Payment of fees. You must pay any applicable witness fees for
current OIG employees and any records certification fees by submitting
to the Counsel a check or money order for the appropriate amount made
payable to the Treasury of the United States. In the case of testimony
by former OIG employees, you must pay applicable fees directly to the
former employee in accordance with applicable statutes.
(e) Waiver or reduction of fees. The Counsel, in his or her sole
discretion, may, upon a showing of reasonable cause, waive or reduce any
fees in connection with the testimony or production of records.
Additionally, fees will not be assessed if the total charge would be
$10.00 or less.
[[Page 105]]
CHAPTER XV--EMERGENCY MORTGAGE INSURANCE AND LOAN PROGRAMS, DEPARTMENT
OF HOUSING AND URBAN DEVELOPMENT
--------------------------------------------------------------------
Part Page
2700 Emergency Homeowners' Loan Program.......... 107
[[Page 107]]
PART 2700_EMERGENCY HOMEOWNERS' LOAN PROGRAM--Table of Contents
Subpart A_General
Sec.
2700.1 Purpose.
2700.5 Definitions.
2700.10 Determination of emergency.
Subpart B_Eligibility
2700.101 Eligible properties.
2700.105 Eligible institutions.
2700.110 Eligible homeowners.
Subpart C_Emergency Assistance
2700.201 Types and terms of emergency assistance.
2700.205 Emergency assistance amount.
2700.210 Finance charges.
Subpart D_Mortgage Insurance
2700.301 Loan applications.
2700.305 Conditions of insurance.
2700.310 Fees.
2700.315 Insurance premium.
2700.320 Servicing.
2700.325 Termination of mortgage insurance.
2700.330 Default.
2700.335 Claims.
2700.340 Payment of insurance benefits.
2700.345 Administrative reports and examinations.
2700.350 Sale, assignment, and pledge of insured loan.
Subpart E_Direct Loans
2700.401 Participation by lending institutions.
2700.405 Application for loans.
2700.410 Transmittal of Funds.
2700.415 Fees.
2700.420 Servicing.
2700.425 Default.
2700.430 Collection.
2700.435 Payment to HUD.
2700.440 Administrative report and examinations.
Authority: 12 U.S.C. 2707; 42 U.S.C. 3535(d)
Source: 76 FR 11950, Mar. 4, 2011, unless otherwise noted.
Subpart A_General
Sec. 2700.1 Purpose.
This part establishes the Emergency Homeowners' Loan Program, a
standby program authorized by the Emergency Homeowners Relief Act of
1975, as amended, to prevent widespread mortgage foreclosures and
distress sales of homes resulting from a homeowner's substantial
reduction in income due to temporary involuntary loss of employment or
underemployment resulting from adverse economic conditions or medical
condition. Under this program, HUD is authorized to provide relief in
the forms of emergency mortgage relief loans, advances of credit, or
emergency mortgage relief payments to struggling unemployed or
underemployed homeowners to help them avoid foreclosure, provided the
homeowner meets certain specific conditions. HUD may provide such relief
through approved institutions, including lending institutions, or
intermediaries designated by HUD. HUD is also authorized to allow
assistance under this program to be administered by a State that has an
existing program that is determined by HUD to provide substantially
similar assistance to homeowners.
Sec. 2700.5 Definitions.
For purposes of this part, the following terms are defined as
follows:
Act means the Emergency Homeowners' Relief Act, title I of the
Emergency Housing Act of 1975 (12 U.S.C. 2701), as amended by the Dodd-
Frank Wall Street Reform and Consumer Protection Act (Pub. L. 111-203,
approved July 21, 2010).
Area Median Income (AMI) means the median family income for the
metropolitan statistical area (MSA) or statewide nonmetropolitan area,
as most recently determined and published by HUD, where the property
meeting the eligibility requirements in Sec. 2700.1 is located.
Delinquent mortgage means a first-lien mortgage secured by property
meeting the eligibility requirements in Sec. 2700.101, where the
homeowner and holder of the delinquent mortgage have certified that
circumstances, including delinquent payments of at least 3 months, make
it probable there will be a foreclosure and that the homeowner is in
need of emergency mortgage relief.
Emergency assistance includes, but is not limited to, an emergency
mortgage
[[Page 108]]
relief loan, advance of credit, or emergency mortgage relief payment
provided to an eligible homeowner, as authorized by the Act, and in
accordance with the requirements of this part.
Event refers to the involuntary unemployment or underemployment
status of the homeowner due to adverse economic conditions or medical
condition. See definition of involuntary unemployment or underemployment
due to adverse economic conditions or adverse medical condition.
Finance charge means the cost of credit as determined in 12 CFR
226.4, a section in Regulation Z of the Federal Reserve System's
regulations on Truth in Lending.
Homeowner means an individual with a mortgage on the individual's
principal residence, in which the individual resides, and who meets the
requirements of Sec. 2700.10 and who is in need of emergency assistance
pursuant to this part.
HUD means the Department of Housing and Urban Development.
Income means the cumulative annual adjusted gross income of the
homeowner, co-makers, and co-signers on the note secured by the
delinquent mortgage and the other mortgagors on the delinquent mortgage.
Involuntary unemployment or underemployment due to adverse economic
conditions or adverse medical condition means the status of a homeowner
who was working, either as a wage or salaried worker or through self-
employment, is currently involuntarily unemployed or underemployed due
to adverse economic conditions or medical condition, and is unable to
meet the homeowner's monthly mortgage payments.
Lender means a lending institution that provides an emergency
mortgage relief loan or advance of credit insured under this part.
Monthly income means one-twelfth of the income, as income is defined
in this section.
Monthly mortgage payment means the monthly amount of principal,
interest, taxes, ground rents, hazard insurance, and mortgage insurance
premiums due to be paid under a homeowner's delinquent mortgage.
Mortgage means any mortgage, deed of trust, executor land sales
contract, conditional sales contract, or other form of security and the
obligation secured by a one- to four-family dwelling that is either real
estate or a manufactured home. Mortgage includes a mortgage on a
condominium unit and a security interest in stock in a housing
cooperative.
Mortgagee means a lending institution that is the holder of the
delinquent mortgage. The mortgagee may be the same entity as the Lender.
Secretary means the Secretary of Housing and Urban Development.
Servicer means any entity which services an emergency loan made by
HUD under this part.
Servicing institution means any entity that services the delinquent
mortgage. The servicing institution may also be the same entity as the
Lender or Servicer.
Term of monthly payments means a period of monthly payments provided
under this part not to exceed 24 months. Eligible homeowners may receive
assistance for up to 12 months, and in accordance with criteria
established by HUD, and such assistance may be extended once for up to
12 additional months, but in no case may monthly payments under this
part exceed 24 months. The eligible homeowner may also receive
assistance in an amount up to the statutory ceiling of $50,000,
whichever occurs first.
Sec. 2700.10 Determination of emergency.
(a) The Secretary is authorized to provide emergency assistance
under the Emergency Homeowners' Loan Program when:
(1) Funds have been explicitly appropriated or made available for
this program and the statute making funding available directs the
Secretary to commence making emergency assistance available to
homeowners; or
(2) The Secretary has announced that this program has been activated
and provides the reasons for activation of this program in a document
published in the Federal Register.
(b) If the Emergency Homeowners' Loan Program is activated pursuant
to paragraph (a) of this section, HUD
[[Page 109]]
shall publish a document in the Federal Register announcing the
activation of the program and inviting one or more categories of
eligible institutions, as defined in Sec. 2700.105, to participate in
the Emergency Homeowners' Loan Program, to provide such emergency
assistance as HUD may designate from among the eligible types of
emergency relief provided in Sec. 2700.201, and provide such other
information regarding participation in the program, as necessary and
appropriate.
Subpart B_Eligibility
Sec. 2700.101 Eligible properties.
(a) In order to qualify for an emergency assistance under this part,
the property of the homeowner seeking assistance must:
(1) Be a single-family residence in a one-to-four unit building, or
a condominium or a housing cooperative or a manufactured home;
(2) Be the principal residence of the homeowner, which means it is
the residence where the homeowner resides;
(3) Be subject to a delinquent mortgage, as defined in Sec. 2700.5,
but not, unless otherwise specified by HUD, subject to liens having a
total outstanding principal balance, as specified by HUD;
(4) Have flood insurance, pursuant to the National Flood Insurance
Program, in an amount equal to at least the initial principal amount of
the emergency loan, if the property is located in an area that has been
identified by HUD at least one year before the origination of the
emergency loan as an area having special flood hazards; and
(5) Meet such other requirements as may be prescribed by HUD for
reasons including, but not limited to, the particular economic
circumstances in which emergency assistance is being made available, or
the type of emergency assistance being made available.
(b) A property that meets the requirements of paragraph (a) of this
section is referred to as the mortgaged property.
Sec. 2700.105 Eligible institutions.
(a) Eligible lending institutions. (1) In order to participate in
the Emergency Homeowners' Loan Program as a lender or servicer, a
lending institution must be approved as a mortgagee by the Federal
Housing Administration in accordance with the applicable requirements in
24 CFR part 203, and meet such other requirements as may be prescribed
by HUD as necessary or appropriate for participation in the Emergency
Homeowners' Loan Program.
(2) Approval of a lending institution pursuant to paragraph (a)(1)
of this section may be withdrawn at any time by notice from HUD for the
following reasons:
(i) The transfer of an insured emergency mortgage relief loan or
advance of credit to a nonapproved entity;
(ii) The failure of a lending institution to submit the required
annual audit report of its financial condition within 75 days of the
close of its fiscal year, or within such other period as may be
specified by HUD; or
(iii) The failure of a lending institution to comply with the
regulations of this part, or such additional program policies or
requirements as specified by HUD. Withdrawal of a lending institution's
approval shall not affect the insurance on the emergency mortgage relief
loans or advances of credit accepted for insurance.
(3) All approved lending institutions are responsible for servicing
of emergency mortgage relief loans and advances of credit in accordance
with acceptable mortgage practices of prudent lending institutions and
pursuant to 24 CFR part 203.
(b) Eligible participating organizations. HUD may delegate authority
with respect to the processing of emergency mortgage relief payments as
may be appropriate to facilitate the prompt and efficient implementation
of assistance under the Emergency Homeowners' Loan Program.
(c) States with comparable programs. HUD is authorized to allow
funding for the Emergency Homeowners' Loan Program to be administered by
a State that has an existing program that is determined by HUD to
provide substantially similar assistance to homeowners. After such
determination is made, any State that HUD authorizes to administer
funding under this program shall not be required to modify its own
program to comply with the provisions of this part.
[[Page 110]]
Sec. 2700.110 Eligible homeowners.
In order to qualify for an emergency assistance under this part, the
homeowner must:
(a) Have a total pre-Event income that is equal to, or less than,
120 percent of the area median income (AMI).
(b) Have incurred a substantial reduction of income as evidenced by
current monthly income that is at least 15 percent lower than the pre-
Event income, as a result of involuntary unemployment or underemployment
due to adverse economic or medical conditions, or such other reduction
in income as may be specified by HUD.
(c) Have a delinquent mortgage, as defined in Sec. 2700.5;
(d) Be financially unable at the time of application for emergency
relief under this part to make full monthly mortgage payments;
(e) Have a reasonable likelihood to resume full monthly mortgage
payments, and repay the emergency assistance pursuant to the terms and
conditions under which the emergency assistance was made available to
the homeowner. The standard for meeting this requirement is debt-to-
income (DTI) ratio. The homeowner must have a back-end ratio of below 55
percent (principal, interest, taxes, insurance, revolving and fixed
installment debt divided by total monthly income), or such other DTI as
may be specified by HUD. For this DTI calculation, income will be
measured at the pre-Event level.
(f) Have not received other emergency assistance pursuant to this
part;
(g) Have been notified that the mortgagee intends to foreclose;
(h) Produce a certification from the mortgagee in which the
homeowner also certifies that circumstances make it probable that the
mortgagee will foreclose on the homeowner's delinquent mortgage; and
(i) Meet such other requirements as may be prescribed by HUD for
reasons including, but not limited to, the particular economic
circumstances in which emergency assistance is being made available, or
the type of emergency assistance being made available.
Subpart C_Emergency Assistance
Sec. 2700.201 Types and terms of emergency assistance.
(a) Types of emergency assistance. Emergency assistance may be
provided to an eligible homeowner in the form of emergency mortgage
relief loans and advances of credit, or in the form of emergency
mortgage relief payments. In accordance with Sec. 2700.205, the
aggregate amount of assistance provided for any eligible homeowner shall
not exceed $50,000 or extend beyond the term of monthly payments, as
defined in Sec. 2700.5.
(1) Emergency mortgage loans and advances. HUD is authorized, upon
such terms and conditions as specified by HUD, to insure financial
institutions, which HUD finds to be qualified by experience and
facilities and approves as eligible for insurance, against losses that
they may sustain as a result of providing emergency mortgage relief
loans or advances of credit made under this part.
(2) Emergency mortgage relief payments. (i) HUD is authorized to
make emergency relief payments under such terms and conditions as HUD
may prescribe. Emergency mortgage relief payments may be provided:
(A) As payment of 100 percent of an eligible homeowner's delinquent
mortgage arrearages, which may include mortgage principal, interest,
insurance, taxes, hazard insurance, ground rent, homeowners' assessment
fees or condominium fees, and foreclosure-related legal fees and late
payments, in accordance with such terms and conditions as prescribed by
HUD; and
(B) As monthly payments due on such delinquent mortgage, for up to a
period not to exceed the term of monthly payments, as provided in Sec.
2700.5.
(ii) Such emergency mortgage relief payments may be repayable in the
form of a declining balance, non-recourse, zero-interest, subordinate
loan secured by the same property securing the delinquent mortgage, for
a term of up to 7 years.
(3) Direct payments to mortgagees. HUD is authorized to make direct
emergency mortgage relief payments to a
[[Page 111]]
mortgagee that elects not to participate in the Emergency Homeowners'
Loan program as an approved mortgagee on behalf of homeowners:
(i) Whose mortgages are held by such mortgagee; and
(ii) Who meet the requirements of Sec. 2700.110.
(b) Terms and conditions of assistance. Emergency mortgage relief
loans and advances of credit made and insured under this part, and
emergency mortgage relief payments made under this part, shall be
repayable by the homeowner upon such terms and conditions prescribed by
HUD, except that:
(1) The rate of interest on any emergency mortgage relief loan or
advance of credit insured shall be fixed for the life of the emergency
mortgage relief loan or advance of credit and shall not exceed the rate
of interest that is generally charged for mortgages on single-family
housing insured by the Federal Housing Administration under title II of
the National Housing Act at the time such emergency mortgage relief loan
or advance of credit is made;
(2) No interest shall be charged on interest that is deferred on an
emergency mortgage relief loan or advance of credit made under this
part. In establishing rates, terms, and conditions for emergency
mortgage relief loans or advances of credit, HUD shall take into account
a homeowner's ability to repay such emergency mortgage relief loan or
advance of credit;
(3) Any mortgage insurance premium charge or charges for any
emergency mortgage relief loan or advance of credit made under this part
shall not exceed an amount equivalent to one-half of one percent per
annum of the principal obligation of such emergency mortgage relief loan
or advance of credit outstanding at any one time;
(4) Unless otherwise specified by HUD for a given fiscal year, the
homeowner's contribution to the monthly mortgage payment will be set at
31 percent of monthly income at the time of the application for
assistance, but in no instance will such contribution to the monthly
mortgage payment be less than $25 per month;
(5) The homeowner may repay the emergency mortgage relief loan or
advance of credit in full, without penalty, by lump sum or by
installment payments at any time before the emergency mortgage relief
loan or advance of credit becomes due and payable; and
(6) With respect to the emergency mortgage relief payments repayable
in the form of a declining balance, non-recourse, zero-interest,
subordinate loan as described Sec. 2700.201(a)(2), no payment shall be
due by the homeowner during the term of the loan so long as the
homeowner remains current in his or her monthly homeowner contribution
payments on the delinquent mortgage. If the homeowner meets this
requirement, the balance due shall decline by such percentage as may be
designated by HUD, until the loan is fully satisfied.
(c) Termination of emergency assistance. Emergency assistance
provided to a homeowner shall be terminated and the homeowner shall
resume full responsibility for meeting the first mortgage payments if
any of the following occur:
(1) The maximum loan amount ($50,000) has been provided to the
homeowner;
(2) The homeowner fails to report changes in employment status or
income within 15 days of the change;
(3) The homeowner's income increases to 85 percent or more of its
pre-Event income level, or such other percentage as may be prescribed by
HUD;
(4) The homeowner sells the mortgaged property or refinances the
mortgaged property for cash-out;
(5) The homeowner defaults on the monthly homeowner's contribution
payment on the delinquent mortgage;
(6) The homeowner has exhausted the full term of monthly payments,
as defined in Sec. 2700.5; or
(7) Such other event as may be specified by HUD.
(d) Deferral of commencement of repayment. HUD may authorize the
deferral of the commencement of the repayment of an emergency mortgage
relief loan or advance of credit or emergency mortgage relief payments
made under this part until one year following the date of the last
disbursement of the proceeds of the emergency mortgage relief loan or
advance of credit or emergency mortgage relief payments,
[[Page 112]]
or for such longer period as HUD determines would further the purpose of
the Emergency Homeowners' Loan Program.
Sec. 2700.205 Emergency assistance amount.
(a) Emergency assistance to an eligible homeowner may be made
available in an amount up to the amount of the principal, interest,
taxes, ground rents, hazard insurance, and mortgage insurance premiums
due under the homeowner's mortgage and such other costs as may be
specified by HUD. The amount of emergency assistance provided to the
homeowner shall be an amount that is determined by HUD to be reasonably
necessary to supplement such amount as the homeowner is capable of
contributing toward the homeowner's delinquent first mortgage payments,
except that the aggregate amount of emergency relief provided to any
homeowner shall not exceed $50,000, including any fees allowed under
Sec. Sec. 2700.310(a) and 2700.415(a).
(b) Arrearage payments and monthly assistance payments may be made
either with the proceeds of an insured emergency mortgage relief loan or
advance of credit or with emergency mortgage relief payments for up to
full term of the monthly payments, as defined in Sec. 2700.5.
(c) Unless otherwise authorized by HUD, the lender or servicer shall
not approve an emergency mortgage loan or advance of credit when the
outstanding balance, including delinquent interest, of the delinquent
mortgage when added to the other liens against the mortgaged property,
plus the maximum emergency mortgage relief loan that may be advanced to
the homeowner under this part, exceeds the value of the mortgaged
property. (In determining the value of the property, the lender or
servicer may rely upon previously obtained appraisals or other
determinations of value of the property and need not obtain a current
appraisal.)
Sec. 2700.210 Finance charges.
The maximum permissible finance charge, exclusive of fees and
charges as provided in Sec. Sec. 2700.310, and 2700.415, which may
directly or indirectly be paid to or collected by the lender or the
servicer in connection with an emergency mortgage relief loan or
advance-of-credit transaction, shall not exceed simple interest on the
outstanding principal balance at the annual interest rate for FHA-
insured home mortgages at such time the emergency mortgage relief loan
or advance of credit is originated. Additionally, no points or discounts
of any kind may be assessed or collected in connection with an emergency
mortgage relief loan or advance-of-credit transaction.
Subpart D_Mortgage Insurance
Sec. 2700.301 Loan applications.
(a) Lending institutions approved by HUD for participation in the
Emergency Homeowners' Loan Program are authorized to accept, process,
and approve applications for emergency mortgage relief loans or advances
of credit under this part under such terms and conditions as HUD may
prescribe.
(b) An approved lender may make an emergency mortgage relief loan or
advances of credit on the terms specified in this part if the lender is
satisfied that the application meets all of the relevant requirements of
this part. The lender shall prepare a note, loan agreement, if any, and
mortgage as required by HUD, which the lender shall record against the
property securing the delinquent mortgage upon the execution of those
documents.
(c) Except as may be otherwise specified by HUD, on the last working
day of the month during which an emergency mortgage relief loan or
advance of credit is closed, the lender shall submit to HUD an
application for an insured emergency mortgage relief loan or advance of
credit on such form as prescribed by HUD, signed by the mortgagor and
holder of the mortgage and that certifies that:
(1) The lender, homeowner, and property meet the eligibility
requirements of this part;
(2) Circumstances (such as the volume of delinquent loans in the
investor's portfolio likely to remain uncured) make it probable that
there
[[Page 113]]
would be a foreclosure of the delinquent mortgage if the emergency
mortgage relief were not provided to the homeowner;
(3) The homeowner is in need of such emergency assistance and the
mortgagee has indicated to the homeowner its intention to foreclose on
the delinquent mortgage; and
(4) The first disbursement of the principal amount of the emergency
mortgage relief loan or advance of credit has been paid or credited to
the homeowner's account with the servicing institution.
Sec. 2700.305 Conditions of insurance.
(a) When the requirements of this part have been met, the lender's
mortgage insurance coverage under its mortgage insurance contract will
apply to a particular loan as of the date of closing, if the lender has
not exceeded the mortgage insurance authority allocation which HUD has
given the lender.
(b) From the effective date of the emergency mortgage relief loan or
advance of credit until the termination of the insurance with respect to
that loan, the lender shall be bound by the provisions of this part as
such provisions relate to the emergency mortgage relief loan or advance
of credit.
Sec. 2700.310 Fees.
(a) The lender may collect from the homeowner during the year
following the origination of the emergency mortgage relief loan or
advance of credit the following fees or charges in conjunction with
providing the emergency mortgage relief loan or advance of credit:
(l) A charge to compensate the lender for expenses incurred in
originating and closing the emergency relief loan, including preparation
of a note, loan agreement, if any, and a mortgage in a form satisfactory
for recordation, the total charge not to exceed such amount as specified
by HUD;
(2) Actual amounts charged by State or local governments or
government officials for recording fees and recording taxes or other
charges incident to making the emergency relief loan or advance of
credit;
(3) An amount equal to the annual premium for flood insurance
required by Sec. 2700.101(a)(4) (the lender shall pay the homeowner's
flood insurance premium for that year to the extent it collects such an
amount); and
(4) An amount equal to the annual mortgage insurance premium
required under Sec. 2700.315.
(b) Subsequent to the year following the origination of the
emergency mortgage relief loan or advance of credit and up to the
termination of mortgage insurance under Sec. 2700.325, the lender may
collect from the homeowner the following fees and charges in connection
with the emergency relief loan: An amount equal to the mortgage
insurance premium required under Sec. 2700.315.
Sec. 2700.315 Insurance premium.
(a) At such times as may be prescribed by HUD, the participating
lender shall pay to HUD a mortgage insurance premium equal to one-half
of one percent of the average outstanding balance of the emergency
mortgage relief loan or advance of credit, during the previous calendar
year, of all emergency mortgage relief loans or advances of credit that
the lender held or serviced during that period pursuant to this part.
(b) With respect to the payment provided for in paragraph (a) of
this section, the lender shall submit a breakdown of the mortgage
insurance premium in the form prescribed by HUD.
(c) If a mortgage securing an emergency mortgage relief loan or
advance of credit is sold, assigned, or pledged pursuant to Sec.
2700.350, any adjustments of the mortgage insurance premium already paid
in connection with a mortgage securing an emergency mortgage relief loan
or advance of credit shall be made by and between the lenders, except
that any unpaid installments of the mortgage insurance premium shall be
paid to HUD by the purchasing lender.
(d) There shall be no refund or abatement of any portion of the
insurance premium except when the mortgage insurance premium relates to
an emergency mortgage relief loan or advance of credit found to be
ineligible. However, no refund shall be made unless a claim is denied by
HUD or the ineligibility is reported by the lender promptly upon
discovery and an application
[[Page 114]]
for refund is made. In no event shall charges be refunded when the
application for refund is not made until after the emergency mortgage
relief loan or advance of credit is paid in full.
Sec. 2700.320 Servicing.
Servicing functions for the emergency mortgage relief loan or
advance of credit during the period that the emergency loan or advance
is insured shall be performed by the lender or the servicing institution
acting for the lender. The lender is responsible for proper servicing,
even though the actual servicing is not performed by the lender.
Sec. 2700.325 Termination of mortgage insurance.
The mortgage insurance coverage and the insured lender's obligation
to remit mortgage insurance premiums to HUD with respect to an emergency
mortgage relief loan or advance of credit shall be terminated upon
whichever of the following first occurs:
(a) The emergency mortgage relief loan or advance of credit is paid
in full;
(b) The lender acquires the mortgaged property securing the
emergency mortgage relief loan or advance of credit and notifies HUD
that no claim for insurance benefits has been or will be made;
(c) The homeowner and the lender jointly request termination; or
(d) The lender files an insurance claim pursuant to Sec. 2700.335.
Sec. 2700.330 Default.
(a) If the homeowner fails to make a scheduled payment or perform
any other obligation required for the type of emergency assistance
provided under this part, the homeowner shall be deemed to be in
default.
(b) For purposes of this subpart, the date of default shall be the
earliest of:
(1) 30 days after the first day the homeowner is delinquent on the
mortgage securing the emergency mortgage relief loan or advance of
credit, if the delinquency remains uncorrected;
(2) The date the property securing the emergency mortgage relief
loan or advance of credit is sold before full repayment of the emergency
loan or advance of credit; and
(3) The date a lien superior to that securing the emergency mortgage
relief loan or advance of credit is foreclosed.
(c) If, after default and prior to the foreclosure of the mortgage
securing the emergency mortgage relief loan or advance of credit, the
homeowner cures the default, the emergency loan or advance of credit
shall be treated as if a default had not occurred, provided the
homeowner pays the lender for any expenses the lender incurred in
connection with the lender's attempt to collect on the emergency
mortgage relief loan or advance of credit.
Sec. 2700.335 Claims.
(a) Claims for mortgage insurance for reimbursement for loss on an
emergency mortgage relief loan or advance of credit shall be made in
such form and provide such information as specified by HUD.
(b) Claims may be filed upon the homeowner's default on the
emergency mortgage relief loan or advance of credit.
(c) When the homeowner defaults on the emergency mortgage relief
loan or advance of credit, the lender may elect to:
(1) Proceed against the mortgage securing the emergency mortgage
relief loan or advance of credit or attempt to collect on the note and
then make a claim under its insurance contract if there is any net loss,
or
(2) Make a claim under its mortgage insurance contract without
proceeding against the security or the note.
(d) Except as may be otherwise specified by HUD, mortgage insurance
claims shall be filed on the last working day of the month, no later
than 90 days after the date of default, unless the lender proceeds
against the mortgage securing the emergency relief loan or advance of
credit, in which case the filing shall be no later than one year after
the date of default, or such other time period as approved by HUD. If at
the time of default or at any time subsequent to the default, a person
primarily or secondarily liable for the repayment of a loan is a person
in ``military service'', as such term is defined in the Servicemembers
Civil Relief Act
[[Page 115]]
of 2003 (Pub. L. 108-189, approved December 19, 2003) (formerly known as
Soldier's and Sailor's Civil Relief Act of 1940) (50 U.S.C. app. 501-
594), the lender shall refrain from instituting foreclosure proceedings
during the period in which the servicemember is in military service and
3 months thereafter and that period shall be excluded in computing the
time within which a claim for insurance benefits under this subpart may
be made.
(e) An insured lender will be reimbursed for its losses on emergency
mortgage relief loans and advances of credit made in accordance with
this part, in an amount equal to 90 percent of the sum of the following:
(1) The unpaid principal amount of the emergency mortgage relief
loan or advance of credit less the amount recovered;
(2) The uncollected interest earned up to the date of claim;
(3) Uncollected court costs, including fees paid for issuing,
serving, and filing summonses;
(4) Attorney's fees actually paid, not exceeding the lesser of:
(i) 25 percent of the amount collected by the attorney on the
defaulted note, or
(ii) 15 percent of the balance due on the note; and
(5) Expenses actually incurred in recording assignments of mortgages
to the United States of America, up to such amount as specified by HUD.
(f) The note and any mortgage held or judgment taken by the claimant
must be assigned in its entirety and if any claim has been filed in
bankruptcy, insolvency, or probate proceedings, such claim shall be
likewise assigned to the United States of America. The assignment shall
be in the form approved by HUD.
Sec. 2700.340 Payment of insurance benefits.
Upon receipt of a claim for insurance benefits that meets the
requirements of Sec. 2700.335 and the other provisions of this part,
HUD shall make a payment of insurance benefits in cash to the claimant
in an amount equal to the amount specified in Sec. 2700.335(e).
Sec. 2700.345 Administrative reports and examinations.
At any time, HUD may call upon an insured lender for such reports as
are deemed to be necessary in connection with the regulations of this
part and may inspect the books or accounts of the lender as they pertain
to the emergency mortgage relief loans or advances of credit that are
insured pursuant to this subpart.
Sec. 2700.350 Sale, assignment, and pledge of insured loan.
(a) No lender may sell or otherwise dispose of any insured emergency
mortgage relief loan or advance of credit except pursuant to this
section.
(b) An insured emergency mortgage relief loan or advance of credit
may be sold to a lending institution eligible under Sec. 2700.105. Upon
such sale, both the seller and the buyer shall notify HUD within 30 days
of the date of sale.
(c) When an insured emergency mortgage relief loan or advance of
credit is sold to another lending institution eligible under Sec.
2700.105, the buyer shall thereupon succeed to all the rights and become
bound by all the obligations of the seller under the contract of
insurance under this part, and the seller shall be released from its
obligations under the contract of insurance.
(d) An assignment, pledge, or transfer of an insured emergency
mortgage relief loan or advance of credit not constituting an actual
transfer of legal title may be made by the lender to another eligible
lending institution, subject to the following conditions:
(1) The assignor, pledgor, or transferor shall remain the lender for
purposes of the contract of insurance under this part.
(2) HUD shall have no obligation to recognize or deal with any party
other than that lender with respect to the rights, benefits, and
obligations of the lender under the contract of insurance. Notice to or
approval of HUD is not required in connection with assignments, pledges,
or transfers pursuant to this subpart.
[[Page 116]]
Subpart E_Direct Loans
Sec. 2700.401 Participation by lending institutions.
A lending institution eligible under Sec. 2700.105 is authorized,
except as may be otherwise prescribed by HUD, to accept, process, and
approve applications for direct loans under this subpart in the form
specified. That authority includes making determinations relating to the
eligibility of the direct loan, homeowner, and property, pursuant to the
provisions of this part. Direct loans, however, may be made pursuant to
this part only when the investor cannot make an emergency loan under
subpart D of this part for good cause, as determined by HUD.
Sec. 2700.405 Application for loans.
(a) The agreement to process an application for a direct loan shall
constitute an acceptance of the lending institution of the
responsibility to act as the servicer of HUD with respect to that
particular application. The servicer shall make a loan on behalf of HUD
on the terms specified in subpart C of this part if the lending
institution is satisfied that the application meets all of the
requirements of this part.
(b) The servicer shall prepare a note, loan agreement, if any, and
mortgage in the form specified in Sec. 2700.201. The servicer shall
record the mortgage upon the closing of the loan. The servicer shall
make the first advance of the loan, as provided for in Sec.
2700.201(d), using its own funds.
(c) On the last working day of the month during which the loan is
closed, the servicer shall submit to HUD a copy of the application
signed by the agent and the homeowner certifying that: The agent,
homeowner, and property qualify under subpart B of this part;
circumstances (such as the volume of delinquent loans in the investor's
portfolio likely to remain uncured) make it probable that there would be
a foreclosure if emergency mortgage relief were not given; the homeowner
is in need of such relief; the investor has indicated to the homeowner
its intention to foreclose; and the first advance of the emergency loan
has been paid or credited to the homeowner's account with the servicing
institution.
Sec. 2700.410 Transmittal of funds.
(a) When the requirements of this part have been met, HUD will
transmit to the servicer, pursuant to the monthly accounting prescribed
in Sec. 2700.420, the emergency loan proceeds, as long as the agent has
not exceeded the lending authority allocation that HUD has given the
servicer pursuant to Sec. 2700.10(c).
(b) When the investor is the servicer, the transmittal of funds
under this section shall be conditioned upon the investor's agreement,
for a period up to one month after the last advance under the emergency
mortgage relief loan, to refrain from instituting foreclosure
proceedings against the homeowner, as long as the amount delinquent at
the time of the origination of the emergency mortgage relief loan,
excluding interest thereon, does not increase, unless HUD's prior
approval is obtained.
(c) From the processing of the application until the satisfaction of
the debt or the final accounting pursuant to Sec. 2700.435, the
servicer shall be bound by the provisions of this part with respect to a
particular direct loan.
Sec. 2700.415 Fees.
(a) The servicer may collect from the homeowner during the year
following the origination of the emergency loan the following fees or
charges in conjunction with providing the emergency loan:
(1) A charge to compensate the servicer for expenses incurred in
originating and closing the emergency mortgage relief loan, including
preparation of a note, loan agreement, if any, and a mortgage in a form
satisfactory for recordation, the total charge not to exceed such amount
as may be specified by HUD;
(2) Actual amounts charged by State or local governments or
government officials for recording fees and recording taxes or other
charges incident to making the emergency loan;
(3) An amount equal to the annual premium for flood insurance
required by Sec. 2700.101(c) (the servicer shall pay
[[Page 117]]
the homeowner's flood insurance premium for that year to the extent it
collects such an amount); and
(4) An amount equal to the annual premium required under Sec.
2700.420(d).
(b) Subsequent to the year following the origination of the
emergency mortgage relief loan and up to the final accounting on the
emergency mortgage relief loan under Sec. 2700.435, the servicer may
collect from the homeowner the fees and charges as provided in this
section.
Sec. 2700.420 Servicing.
(a) Servicing functions during the period that the emergency
mortgage relief loan is outstanding shall be performed by the servicer.
(b) On the same day each month while the servicer is servicing
emergency mortgage relief loans for HUD, the servicer shall submit a
monthly accounting, in the form prescribed by HUD, for all of the
emergency mortgage relief loans that it services. The accounting shall
list the amount of funds that it advanced under emergency mortgage
relief loans during the previous calendar month. In addition, the
accounting shall list the amount paid to the servicer under the
emergency mortgage relief loans serviced by the servicer during the
previous calendar month.
(c) If, pursuant to the monthly accounting, the amount HUD owes the
servicer exceeds the amount the servicer owes HUD, HUD shall remit the
difference to the servicers, as long as HUD finds the accounting in
order. If, pursuant to the monthly accounting, the amount the servicer
owes HUD exceeds the amount HUD owes the servicer, the servicer shall
remit the difference when the servicer submits the monthly accounting to
HUD.
(d) At such times as may be prescribed by HUD, the servicer, in
addition to making its monthly accounting, shall pay to HUD a premium
equal to one-half of one percent of the average outstanding balance
during the previous calendar year of all the emergency mortgage relief
loans it serviced during that period. That payment shall be accompanied
by a breakdown of the premium in the form prescribed by HUD.
Sec. 2700.425 Default.
(a) If the homeowner fails to make any payment or to perform any
other obligation under the mortgage securing the emergency mortgage
relief loan, the homeowner shall be deemed to be delinquent on such
loan.
(b) For purposes of this subpart, the date of default shall be the
earliest of:
(1) 30 days after the first day the homeowner is delinquent on the
emergency mortgage relief loan, if the delinquency remains uncorrected:
(2) The date the mortgaged property is sold before full repayment of
the emergency mortgage relief loan; and
(3) The date a lien superior to that securing the emergency mortgage
relief loan is foreclosed.
(c) If, after default and prior to the foreclosure of the mortgage
securing the emergency mortgage relief loan, the homeowner cures the
default, the emergency mortgage relief loan shall be treated as if the
default had not occurred, provided the homeowner pays the servicer for
any expenses the servicer incurred in connection with the servicer's
attempt to collect on the loan.
Sec. 2700.430 Collection.
(a) If a homeowner defaults on an emergency mortgage loan, the
servicer shall elect:
(1) To wait while the Department of Justice proceeds against the
mortgage securing the emergency mortgage relief loan or attempts to
collect on the note, and then to make an accounting and payment to HUD,
as provided in Sec. 2700.435, or
(2) To make an accounting and payment, as provided in Sec.
2700.435, without waiting while the Department of Justice proceeds
against the mortgage or note.
(b) If pursuant to paragraph (a) of this section, the servicer
elects to make an accounting without waiting while the Department of
Justice proceeds against the mortgage or note, the servicer at the time
of that accounting will have the option of purchasing the emergency loan
and underlying mortgage for a price equal to 0.5 times the unpaid
principal balance.
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Sec. 2700.435 Payment to HUD.
(a) Before the expiration of the period of 90 days after the date of
default, or such other time period as HUD approves, the servicer shall
transmit to HUD on the last working day of the month the complete credit
and collection file pertaining to the emergency mortgage relief loan.
(b) At the same time the servicer makes the transmittal as provided
in paragraph (a) of this section, it shall share the loss on the
emergency mortgage relief loan by making a payment to HUD in an amount
equal to 10 percent of the sum of:
(1) The unpaid principal amount of the emergency mortgage relief
loan, less the amount recovered; and
(2) The uncollected interest earned up to the date of the final
accounting. Accompanying that payment shall be a final accounting of the
emergency mortgage relief loan, in the form specified by HUD, and the
note and mortgage executed in connection with the emergency mortgage
relief loan.
(c) Notwithstanding the provisions of paragraph (b) of this section,
in the event that the aggregate loss borne by HUD reaches such percent,
as specified in the Federal Register document activating the Emergency
Homeowners' Loan Program, of the aggregate amount advanced by the
servicer on behalf of HUD under this subpart, the servicer shall bear
the burden of any loss in excess of that such percent by making an
appropriate payment to HUD within the time period specified in paragraph
(a) of this section.
(d) If at the time of default or at any time subsequent to default,
a person primarily or secondarily liable for the repayment of an
emergency loan is a person in ``military service'', as such term is
defined in the Servicemembers Civil Relief Act of 2003 (Pub. L. 108-189,
approved December 19, 2003) (formerly known as Soldier's and Sailor's
Civil Relief Act of 1940) (50 U.S.C. app. 501-594), the period the
servicemember is in military service and 3 months thereafter and that
period shall be excluded in computing the time within which an
accounting and payment are to be made pursuant to paragraph (a) of this
section.
Sec. 2700.440 Administrative report and examinations.
HUD may at any time call for a report from any servicer on the
delinquency status of the emergency mortgage relief loans serviced by
the servicer on behalf of HUD or call for such reports as may be deemed
to be necessary in connection with the provisions of this part, or HUD
may inspect the books or accounts of the servicer as they pertain to
those emergency mortgage relief loans.
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CHAPTER XX--OFFICE OF ASSISTANT SECRETARY FOR HOUSING--FEDERAL HOUSING
COMMISSIONER, DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT