SECTIONS 11010-11023 - California Statutes

BUSINESS AND PROFESSIONS CODE

SECTION 11010-11023

11010. (a) Except as otherwise provided pursuant to subdivision (c)
or elsewhere in this chapter, any person who intends to offer
subdivided lands within this state for sale or lease shall file with
the Department of Real Estate an application for a public report
consisting of a notice of intention and a completed questionnaire on
a form prepared by the department.
(b) The notice of intention shall contain the following
information about the subdivided lands and the proposed offering:
(1) The name and address of the owner.
(2) The name and address of the subdivider.
(3) The legal description and area of lands.
(4) A true statement of the condition of the title to the land,
particularly including all encumbrances thereon.
(5) A true statement of the terms and conditions on which it is
intended to dispose of the land, together with copies of any
contracts intended to be used.
(6) A true statement of the provisions, if any, that have been
made for public utilities in the proposed subdivision, including
water, electricity, gas, telephone, and sewerage facilities. For
subdivided lands that were subject to the imposition of a condition
pursuant to subdivision (b) of Section 66473.7 of the Government
Code, the true statement of the provisions made for water shall be
satisfied by submitting a copy of the written verification of the
available water supply obtained pursuant to Section 66473.7 of the
Government Code.
(7) A true statement of the use or uses for which the proposed
subdivision will be offered.
(8) A true statement of the provisions, if any, limiting the use
or occupancy of the parcels in the subdivision.
(9) A true statement of the amount of indebtedness that is a lien
upon the subdivision or any part thereof, and that was incurred to
pay for the construction of any onsite or offsite improvement, or any
community or recreational facility.
(10) A true statement or reasonable estimate, if applicable, of
the amount of any indebtedness which has been or is proposed to be
incurred by an existing or proposed special district, entity, taxing
area, assessment district, or community facilities district within
the boundaries of which, the subdivision, or any part thereof, is
located, and that is to pay for the construction or installation of
any improvement or to furnish community or recreational facilities to
that subdivision, and which amounts are to be obtained by ad valorem
tax or assessment, or by a special assessment or tax upon the
subdivision, or any part thereof.
(11) A notice pursuant to Section 1102.6c of the Civil Code.
(12) (A) As to each school district serving the subdivision, a
statement from the appropriate district that indicates the location
of each high school, junior high school, and elementary school
serving the subdivision, or documentation that a statement to that
effect has been requested from the appropriate school district.
(B) In the event that, as of the date the notice of intention and
application for issuance of a public report are otherwise deemed to
be qualitatively and substantially complete pursuant to Section
11010.2, the statement described in subparagraph (A) has not been
provided by any school district serving the subdivision, the person
who filed the notice of intention and application for issuance of a
public report shall immediately provide the department with the name,
address, and telephone number of that district.
(13) (A) The location of all existing airports, and of all
proposed airports shown on the general plan of any city or county,
located within two statute miles of the subdivision. If the property
is located within an airport influence area, the following statement
shall be included in the notice of intention:

NOTICE OF AIRPORT IN VICINITY
This property is presently located in the
vicinity of an airport, within what is known as
an airport influence area. For that reason, the
property may be subject to some of the
annoyances or inconveniences associated with
proximity to airport operations (for example:
noise, vibration, or odors). Individual
sensitivities to those annoyances, if any, are
associated with the property before you
complete your purchase and determine whether
they are acceptable to you.

(B) For purposes of this section, an "airport influence area,"
also known as an "airport referral area," is the area in which
current or future airport-related noise, overflight, safety, or
airspace protection factors may significantly affect land uses or
necessitate restrictions on those uses as determined by an airport
land use commission.
(14) A true statement, if applicable, referencing any soils or
geologic report or soils and geologic reports that have been prepared
specifically for the subdivision.
(15) A true statement of whether or not fill is used, or is
proposed to be used, in the subdivision and a statement giving the
name and the location of the public agency where information
concerning soil conditions in the subdivision is available.
(16) On or after July 1, 2005, as to property located within the
jurisdiction of the San Francisco Bay Conservation and Development
Commission, a statement that the property is so located and the
following notice:
NOTICE OF SAN FRANCISCO BAY CONSERVATION AND DEVELOPMENT COMMISSION
JURISDICTION

This property is located within the jurisdiction of the San
Francisco Bay Conservation and Development Commission. Use and
development of property within the commission's jurisdiction may be
subject to special regulations, restrictions, and permit
requirements. You may wish to investigate and determine whether they
are acceptable to you and your intended use of the property before
you complete your transaction.

(17) If the property is presently located within one mile of a
parcel of real property designated as "Prime Farmland," "Farmland of
Statewide Importance," "Unique Farmland," "Farmland of Local
Importance," or "Grazing Land" on the most current "Important
Farmland Map" issued by the California Department of Conservation,
Division of Land Resource Protection, utilizing solely the
county-level GIS map data, if any, available on the Farmland Mapping
and Monitoring Program Website. If the residential property is within
one mile of a designated farmland area, the report shall contain the
following notice:

NOTICE OF RIGHT TO FARM

This property is located within one mile of a farm or ranch land
designated on the current county-level GIS "Important Farmland Map,"
issued by the California Department of Conservation, Division of Land
Resource Protection. Accordingly, the property may be subject to
inconveniences or discomforts resulting from agricultural operations
that are a normal and necessary aspect of living in a community with
a strong rural character and a healthy agricultural sector. Customary
agricultural practices in farm operations may include, but are not
limited to, noise, odors, dust, light, insects, the operation of
pumps and machinery, the storage and disposal of manure, bee
pollination, and the ground or aerial application of fertilizers,
pesticides, and herbicides. These agricultural practices may occur at
any time during the 24-hour day. Individual sensitivities to those
practices can vary from person to person. You may wish to consider
the impacts of such agricultural practices before you complete your
purchase. Please be advised that you may be barred from obtaining
legal remedies against agricultural practices conducted in a manner
consistent with proper and accepted customs and standards pursuant to
Section 3482.5 of the Civil Code or any pertinent local ordinance.

(18) Any other information that the owner, his or her agent, or
the subdivider may desire to present.
(c) The commissioner may, by regulation, or on the basis of the
particular circumstances of a proposed offering, waive the
requirement of the submission of a completed questionnaire if the
commissioner determines that prospective purchasers or lessees of the
subdivision interests to be offered will be adequately protected
through the issuance of a public report based solely upon information
contained in the notice of intention.

11010.05. A person who proposes to create a senior citizen housing
development, as defined in Section 51.3 or 51.11 of the Civil Code,
shall include in the application for a public report a complete
statement of the restrictions on occupancy that are to be applicable
in the development. Any public report issued for a senior housing
development shall also include a complete statement of the
restrictions on occupancy to be applicable in the development. This
section shall become operative on July 1, 2001, and shall apply to
all applications for a public report for a senior housing development
submitted to the department on or after July 1, 2001.

11010.1. Prior to the issuance of promissory notes secured by
individual lots in an unrecorded subdivision, the owner, his agent or
subdivider shall notify the commissioner in writing of his intention
to issue such notes.
The notice of intention shall contain the following information:
(a) The name and address of the owner.
(b) The name and address of the subdivider.
(c) The legal description and area of lands.
(d) A true statement of the condition of the title to the land,
particularly including all encumbrances thereon.
(e) A true statement of the terms and conditions on which it is
intended to issue the promissory notes.
(f) A true statement of the provisions, if any, that have been
made for public utilities in the proposed subdivision, including
water, electricity, gas and telephone facilities.
(g) Such other information as the owner, his agent or subdivider,
may desire to present.

11010.2. (a) As used in this section:
(1) "Quantitative" means the number and type of documents required
to make the filing substantially complete, as defined in the
regulations of the commissioner, without regard to the content of
those requirements.
(2) "Qualitatively complete" means that all deficiencies and
substantive inadequacies contained in the documents that were
required to make the filing substantially complete have been
corrected.
(3) "Substantially complete" means that a notice and application
contain all requirements as set forth in the regulations of the
commissioner.
(b) Upon receipt of a notice of intention pursuant to Section
11010 and an application for issuance of a public report, the
commissioner shall review the notice and application to determine if
the notice and application are substantially complete, with respect
to quantitative requirements. The commissioner shall notify the
applicant in writing of that determination within 10 days of receipt
of the notice and application.
(1) If the notice and application are not substantially complete
with respect to the quantitative requirements pursuant to this
subdivision, the notification shall specify the information needed to
make the notice and application substantially complete. Upon receipt
of any resubmittal of a notice and application, the commissioner
shall notify the applicant in writing of that determination within 10
days of receipt of the notice and application.
(2) If the commissioner determines that the notice and application
are substantially complete with respect to the quantitative
requirements pursuant to this subdivision, the commissioner shall
provide the applicant with a list of all deficiencies and substantive
inadequacies necessary for the notice and application to be
qualitatively complete, within 60 days of that determination, in the
case of subdivisions specified in Section 11000.1 or 11004.5, and
within 20 days of that determination, in the case of other
subdivisions.
(c) Upon receipt of all documents, materials, writings, and other
information submitted in response to the list in paragraph (2) of
subdivision (b), the commissioner shall notify the applicant whether
the notice and application are qualitatively complete within 30 days,
in the case of subdivisions specified in Section 11000.1 or 11004.5,
and within 20 days of receipt, in the case of other subdivisions. If
the application and notice are not qualitatively complete, the
notification shall include a list of any remaining deficiencies and
substantive inadequacies. Upon receipt of any resubmittal of
documents, materials, writings, and other information in response to
a list of any remaining deficiencies and substantive inadequacies,
the commissioner shall provide notification within the time limits
specified in this subdivision.
(d) The commissioner shall issue a public report within 15 days,
in the case of a subdivision specified in Section 11000.1 or 11004.5,
or 10 days, in the case of other subdivisions, after the notice and
application are determined to be qualitatively and substantially
complete, and submittal of recorded or filed instruments and evidence
of financial arrangements required by the commissioner.
(e) Upon receipt of an application for approval of a declaration
as provided in Section 11010.10, the commissioner shall notify the
applicant of any deficiency or inadequacy in the declaration within
60 days of its receipt. The commissioner shall notify the applicant
of any deficiency or inadequacy in a declaration that has been
revised following the first notice of deficiency or inadequacy within
30 days of its receipt.
(f) The commissioner shall adopt regulations, in accordance with
Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3
of Title 2 of the Government Code, that define "substantially
complete" and that list all the requirements necessary for a notice
of intention and application to be considered "substantially
complete."
(g) The commissioner may adopt emergency regulations, in
accordance with Chapter 3.5 (commencing with Section 11340) of Part 1
of Division 3 of Title 2 of the Government Code, to increase, as set
forth below, those time periods specified in subdivisions (b), (c),
and (d), upon a showing that the number of notices of intention and
applications for a subdivision public report filed with the
department for any immediately preceding six-month period has
increased by more than 15 percent over the monthly average number of
notices and applications filed for the base period commencing July 1,
1983, and ending June 30, 1986:
(1) The time for issuing the notice provided in subdivision (b)
shall increase to 15 days.
(2) The time for providing the listing required by paragraph (2)
of subdivision (b) shall increase to 90 days, in the case of
subdivisions specified in Sections 11000.1 and 11004.5, and to 30
days, in the case of other subdivisions.
(3) The time period provided in subdivision (c) for responding to
receipt of documents intended to correct deficiencies shall be 30
days without regard to the type of subdivision being processed.
(4) The time periods provided in subdivision (d) within which the
commissioner is required to issue a public report in the case of
subdivisions specified in Sections 11000.1 and 11004.5, shall
increase to 30 days and in the case of other subdivisions shall
increase to 15 days.
This section does not apply to filings made exclusively under
Section 11010.1. Nothing in this section requires the commissioner to
issue a public report where grounds for denial exist, provided that
issuance of a public report shall not be denied for inadequate
information if the cause thereof is the commissioner's failure to
comply with this section.
Notwithstanding other provisions of this section, the commissioner
shall not be required to issue a public report if grounds for denial
exist under Section 11018 or 11018.5. However, the commissioner may
not base the denial of a public report on the lack of adequate
information if the commissioner has not acted within the time periods
prescribed in this section.

11010.3. The provisions of this chapter shall not apply to the
proposed sale or lease of lots or other interests in a subdivision in
which lots or other interests are (a) limited to industrial or
commercial uses by zoning or (b) limited to industrial or commercial
uses by a declaration of covenants, conditions, and restrictions,
which declaration has been recorded in the official records of the
county or counties in which the subdivision is located.

11010.35. (a) The provisions of this chapter shall not apply to the
proposed sale or lease of five or more lots, parcels, or other
interests in a subdivision or the sale of one or more lots or parcels
in a subdivision where the lot or lots or parcel or parcels are
intended to be further subdivided into five or more lots, parcels, or
other subdivision interests as defined in Sections 11000, 11000.1,
and 11004.5, to any person who acquires the lots, parcels, or other
subdivision interests for the purpose of engaging in the business of
constructing residential, commercial, or industrial buildings, or for
the purpose of resale or lease of the lots, parcels, or other
subdivision interests to persons engaged in this business, provided
that the purchase or lease agreement or a separate disclosure
document includes a statement or provision that the purchaser or
lessee is required to comply with the applicable provisions of this
chapter prior to offering for sale or lease any lot, parcel, or other
subdivision interest acquired pursuant to the exemption granted by
this subdivision.
(b) The exemption provided by subdivision (a) does not apply to a
proposed sale or lease of lots, parcels, or other subdivision
interests that is done for the purpose of evading any other provision
of this chapter.
(c) The provisions of subdivision (a) are intended to clarify the
application of this chapter to the commercial sale or lease of
residential subdivision interests and should not be interpreted to
impose requirements on transactions entered into prior to the date on
which this section became operative.

11010.4. The notice of intention specified in Section 11010 is not
required for a proposed offering of subdivided land that satisfies
all of the following criteria:
(a) The owner, subdivider, or agent has complied with Sections
11013.1, 11013.2, and 11013.4, if applicable.
(b) The subdivided land is not a subdivision as defined in Section
11000.1 or 11004.5.
(c) Each lot, parcel or unit of the subdivision is located
entirely within the boundaries of a city.
(d) Each lot, parcel or unit of the subdivision will be sold or
offered for sale improved with a completed residential structure and
with all other improvements completed that are necessary to occupancy
or with financial arrangements determined to be adequate by the city
to ensure completion of the improvements.

11010.5. The filing of a second notice of intention to sell and a
second report of the commissioner under this article shall not be
required when all the following conditions have been met: (a) where
there has been a previous subdivision report and the lots are
subsequently acquired through any foreclosure action, or by a deed in
lieu of foreclosure, by a bank, life insurance company, industrial
loan company, credit union, or savings and loan association licensed
or operating under the provisions of a state or federal law if the
acquired lots, either improved or unimproved, will be sold in
conformance with the previously issued subdivision public report; (b)
the original public report is given to the first purchasers of the
lots in the foreclosed subdivision; and (c) the commissioner is
notified of the change of ownership within 30 days of the acquisition
of the title to such property.

11010.6. The provisions of this chapter shall not be applicable to
subdivided land which is offered or proposed to be offered for sale,
lease, or financing by a state agency, including the University of
California, a local agency, or other public agency.

11010.7. The notice of intention specified in Section 11010 shall
not apply to nonbinding expressions of intent to purchase or lease
which an owner, agent, or subdivider is required to obtain from the
tenants of units which are proposed to be converted to a condominium,
community apartment project, or stock cooperative project, by
ordinance, or as a condition to the approval of a tentative or parcel
map pursuant to Division 2 (commencing with Section 66410) of Title
7 of the Government Code.

11010.8. (a) The requirement that a notice of intention be filed
pursuant to Section 11010 is not applicable to the purchase of a
mobilehome park by a nonprofit corporation if all of the following
occur:
(1) A majority of the shareholders or members of the nonprofit
corporation constitute a majority of the homeowners of the mobilehome
park, and a majority of the members of the board of directors of the
nonprofit corporation are homeowners of the mobilehome park.
(2) All members of the corporation are residents of the mobilehome
park. Members of the nonprofit corporation may enter into leases
with the corporation that are greater than five years in length.
"Homeowners" or "residents" of the mobilehome park shall include a
bona fide secured party who has, pursuant to a security interest in a
membership, taken title to the membership by means of foreclosure,
repossession, or voluntary repossession, and who is actively
attempting to resell the membership to a prospective resident or
homeowner of the mobilehome park, in accordance with subdivision (f)
of Section 7312 of the Corporations Code.
(3) A permit to issue securities under Section 25113 of the
Corporations Code is obtained from the Department of Corporations. In
the case of a nonissuer transaction (as defined by Section 25011 of
the Corporations Code) involving the offer to resell or the resale of
memberships by a bona fide secured party as described in paragraph
(2) of this section, a permit is not required where the transaction
is exempt from the qualification requirements of Section 25130 of the
Corporations Code pursuant to subdivision (e) of Section 25104 of
the Corporations Code. The exemption from qualification pursuant to
subdivision (e) of Section 25104 of the Corporations Code available
to a bona fide secured party does not eliminate the requirement of
this section that the nonprofit corporation shall either file a
notice of intention pursuant to Section 11010 or obtain a permit
pursuant to Section 25113 of the Corporations Code.
(4) All funds of tenants for the purchase of the mobilehome park
are deposited in escrow until the document transferring title of the
mobilehome park to the nonprofit corporation is recorded. The escrow
also shall include funds of homeowners that shall be available to the
homeowners association nonprofit corporation for payment of any and
all costs reasonably associated with the processing and conversion of
the mobilehome park into condominium interests. Payment of these
costs may be made from the funds deposited in escrow prior to the
close of escrow upon the direction of the homeowners association
nonprofit corporation.
(b) The funds described by paragraph (4) of subdivision (a), or
any other funds subsequently received from tenants for purposes other
than the purchase of a separate subdivided interest in any portion
of the mobilehome park, are not subject to the requirements of
Section 11013.1, 11013.2, or 11013.4.

11010.9. (a) Notwithstanding any other provision of law, the
subdivider of a mobilehome park that is proposed to be converted to
resident ownership, prior to filing a notice of intention pursuant to
Section 11010, shall disclose to homeowners and residents of the
park, by written notice, the tentative price of the subdivided
interest proposed to be sold or leased.
(b) The disclosure notice required by subdivision (a) shall
include a statement that the tentative price is not binding, could
change between the time of disclosure and the time of governmental
approval to commence the actual sale or lease of the subdivided
interests in the park, as the result of conditions imposed by the
state or local government for approval of the park conversion,
increased financing costs, or other factors and, in the absence of
bad faith, shall not give rise to a claim for liability against the
provider of this information.
(c) The disclosure notice required by subdivision (a) shall not be
construed to authorize the subdivider of a mobilehome park that is
proposed to be converted to resident ownership to offer to sell or
lease, sell or lease, or accept money for the sale or lease of,
subdivided interests in the park, or to engage in any other
activities that are otherwise prohibited, with regard to subdividing
the park into ownership interests, prior to the issuance of a public
report pursuant to this chapter.

11010.10. A person who plans to offer for sale or lease lots or
other interests in a subdivision which sale or lease (a) is not
subject to the provisions of this chapter, (b) does not require the
submission of a notice of intention as provided in Section 11010, or
(c) is subject to this chapter and for which the local jurisdiction
requires review and approval of the declaration, as defined in
subdivision (h) of Section 1351 of the Civil Code, prior to or
concurrently with the recordation of the subdivision map and prior to
the approval of the declaration pursuant to a notice of intention
for a public report, may submit an application requesting review of
the declaration, along with any required supporting documentation, to
the commissioner, without the filing of a notice of intention for
the subdivision for which the declaration is being prepared. Upon
approval, the commissioner shall give notice to the applicant that
the declaration shall be approved for a subsequent notice of intent
filing for any public report for the subdivision identified in the
application, provided that the subdivision setup is substantially the
same as that originally described in the application for review of
the declaration.

11010.11. Notwithstanding any provision in the purchase contract to
the contrary, if the subdivision is to be used for residential
purposes, the subdivision public report shall disclose that a
prospective buyer has the right to negotiate with the seller to
permit inspections of the property by the buyer, or the buyer's
designee, under terms mutually agreeable to the prospective buyer and
seller.

11011. (a) The commissioner may by regulation prescribe filing fees
in connection with applications to the Department of Real Estate
pursuant to this chapter that are lower than the maximum fees
specified in subdivision (b) if the commissioner determines that the
lower fees are sufficient to offset the costs and expenses incurred
in the administration of this chapter. The commissioner shall hold at
least one hearing each calendar year to determine if lower fees than
those specified in subdivision (b) should be prescribed.
(b) The filing fee for an application for a public report to be
issued under authority of this chapter shall not exceed the following
for each subdivision or phase of a subdivision in which interests
are to be offered for sale or lease:
(1) A notice of intention without a completed questionnaire: One
hundred fifty dollars ($150).
(2) An original public report for subdivision interests described
in Section 11004.5: One thousand seven hundred dollars ($1,700) plus
ten dollars ($10) for each subdivision interest to be offered.
(3) An original public report for subdivision interests other than
those described in Section 11004.5: Six hundred dollars ($600) plus
ten dollars ($10) for each subdivision interest to be offered.
(4) A conditional public report for subdivision interests
described in Section 11004.5: Five hundred dollars ($500).
(5) A conditional public report for subdivision interests other
than those described in Section 11004.5: Five hundred dollars ($500).
(6) A preliminary public report for subdivision interests
described in Section 11004.5: Five hundred dollars ($500).
(7) A preliminary public report for subdivision interests other
than those described in Section 11004.5: Five hundred dollars ($500).
(8) A renewal public report for subdivision interests described in
Section 11004.5: Six hundred dollars ($600).
(9) A renewal public report for subdivision interests other than
those described in Section 11004.5: Six hundred dollars ($600).
(10) An amended public report for subdivision interests described
in Section 11004.5: Five hundred dollars ($500) plus ten dollars
($10) for each subdivision interest to be offered under the amended
public report for which a fee has not previously been paid.
(11) An amended public report to offer subdivision interests other
than those described in Section 11004.5: Five hundred dollars ($500)
plus ten dollars ($10) for each subdivision interest to be offered
under the amended public report for which a fee has not previously
been paid.
(c) The filing fee to review a declaration as described in Section
11010.10 shall not exceed two hundred dollars ($200).
(d) The actual subdivision fees established by regulation under
authority of this section and Section 10249.3 shall not exceed the
amount reasonably required by the department to administer this part
and Article 8 (commencing with Section 10249) of Chapter 3 of Part 1.
(e) All fees collected by the department under authority of this
chapter shall be deposited into the Real Estate Fund under Chapter 6
(commencing with Section 10450) of Part 1. All fees received by the
department pursuant to this chapter shall be deemed earned upon
receipt. No part of any fee is refundable unless the commissioner
determines that it was paid as the result of a mistake or
inadvertence.
This section shall remain in effect unless it is superseded
pursuant to Section 10226 or subdivision (a) of Section 10226.5,
whichever is applicable.

11012. It is unlawful for the owner, his agent, or subdivider, of
the project, after it is submitted to the Department of Real Estate,
to materially change the setup of such offering without first
notifying the Department of Real Estate in writing of such intended
change. This section only applies to those changes of which the
owner, his agent, or subdivider has knowledge or constructive
knowledge.

11013. For the purposes of this part, a blanket encumbrance shall
be considered to mean a trust deed or mortgage or any other lien or
encumbrance, mechanics' lien or otherwise, securing or evidencing the
payment of money and affecting land to be subdivided or affecting
more than one lot or parcel of subdivided land, or an agreement
affecting more than one such lot or parcel by which the owner or
subdivider holds said subdivision under an option, contract to sell,
or trust agreement.

11013.1. It shall be unlawful, except as provided in Section
11013.2, for the owner, subdivider, or agent to sell or lease lots or
parcels within a subdivision that is subject to a blanket
encumbrance unless there exists in such blanket encumbrance or other
supplementary agreement a provision, hereinafter referred to as a
release clause, which by its terms shall unconditionally provide that
the purchaser or lessee of a lot or parcel can obtain legal title or
other interest contracted for, free and clear of such blanket
encumbrance, upon compliance with the terms and conditions of the
purchase or lease.

11013.2. Should there not exist in the blanket encumbrance or
supplementary agreement a release clause as set forth in Section
11013.1, then it shall be unlawful for the owner, subdivider, or
agent to sell or lease lots or parcels within such subdivision unless
one of the following conditions is complied with:
(a) The entire sum of money paid or advanced by the purchaser or
lessee of any such lot or parcel, or such portion thereof as the
commissioner shall determine is sufficient to protect the interest of
the purchaser or lessee, shall be deposited into an escrow
depository acceptable to the commissioner until either (1) a proper
release is obtained from such blanket encumbrance; or (2) either the
owner, subdivider, or agent or the purchaser or lessee may default
under their contract of sale or lease and there is a determination as
to the disposition of such moneys; or (3) the owner, subdivider, or
agent orders the return of such moneys to such purchaser or lessee.
(b) The title to the subdivision is to be held in trust under an
agreement of trust acceptable to the commissioner until a proper
release from such blanket encumbrance is obtained.
(c) A bond to the State of California is furnished to the
commissioner for the benefit and protection of purchasers or lessees
of such lots or parcels, in such amount and subject to such terms as
may be approved by the commissioner, which shall provide for the
return of the moneys paid or advanced by any purchaser or lessee, for
or on account of the purchase or lease of any such lot or parcel if
a proper release from such blanket encumbrance is not obtained;
provided, however, that if it should be determined that such
purchaser or lessee, by reason of default or otherwise, is not
entitled to the return of such moneys, or any portion thereof, then
such bond shall be exonerated to the extent of the amount of such
moneys to which such purchaser or lessee is not entitled.
(d) There is conformance to such other alternative requirement or
method which the commissioner may deem acceptable to carry into
effect the intent and provisions of this part.

11013.3. Taxes and assessments levied by public authority shall not
be considered a blanket encumbrance within the meaning of Section
11013.

11013.4. If a subdivision is not subject to a blanket encumbrance,
as defined in Section 11013, it is unlawful for the owner,
subdivider, or agent to sell or lease lots or parcels within a
subdivision unless one of the following conditions is complied with:
(a) The entire sum of money paid or advanced by the purchaser or
lessee of any lot or parcel, or such portion thereof as the
commissioner determines is sufficient to protect the interest of the
purchaser or lessee, is deposited into an escrow depository
acceptable to the commissioner or into a trust account acceptable to
the commissioner to be held in the escrow depository or trust account
until the legal title or other interest contracted for, whether
title of record or other interest, is delivered to the purchaser or
lessee or until (1) either the owner, subdivider, or agent or the
purchaser or lessee defaults under the contract of sale or lease and
a determination is made as to the disposition of the money; or (2)
the owner, subdivider, or agent orders the return of the money to the
purchaser or lessee.
(b) A bond to the State of California is furnished to the
commissioner for the benefit and protection of purchasers or lessees
of the lots or parcels, in such amount and subject to such terms as
may be approved by the commissioner, which provides for the return of
the money paid or advanced by any purchaser or lessee, for or on
account of the purchase or lease of any lot or parcel in the event
that the owner, subdivider, or agent does not, within the time
specified in the contract to sell or lease, or any extension thereof,
deliver the legal title or other interest contracted for, whether
title of record or other interest, to the purchaser or lessee for any
reason other than an uncured default of the purchaser or lessee.
(c) An association, approved by the commissioner, files with the
commissioner a certificate in which it certifies that the owner,
subdivider, or agent is a member of the association and that there is
on file with the commissioner a bond, of the kind specified in
subdivision (b), which has been approved by the commissioner as to
amount, terms and coverage, and which is for the benefit and
protection of all purchasers and lessees of subdivided lots or
parcels to be sold or leased by members of the association (all which
the commissioner may, at the commissioner's option, verify or
require to be verified).
(d) Proof, satisfactory to the commissioner, is furnished: (1)
that security provided or contemplated to be given pursuant to the
provisions of Section 66493 and Chapter 5 (commencing with Section
66499) of Division 2 of Title 7 of the Government Code, has been
given in an amount, the commissioner approves, or that the giving of
such security is unnecessary; and (2) that a lien and completion bond
or bonds, approved by the commissioner as to amount, terms and
coverage and including within its scope all onsite construction work
to be undertaken on the lots or parcels, has been written and issued
by an admitted surety insurer; provided, however, that this
subdivision applies only to an owner, subdivider, or agent who
proposes to sell or lease the lots or parcels with improvements
thereon in the nature of residential structures.
(e) The entire sums of moneys paid or advanced by the purchasers
or lessees of the lots or parcels, or such portion of the money as
the commissioner determines is sufficient to protect the interest of
the purchaser or lessee, is deposited into an escrow depository or
other agency, acceptable to the commissioner, to be held, in whole or
in part, by the escrow depository or other agency as provided by
subdivision (a) or, at the election of the owner, subdivider, or
agent, to be disbursed, in whole or in part, for the construction of
residential or other structures to be built on the lots or parcels
within the subdivision, or such unit or units thereof as the
commissioner determines, in such manner and pursuant to such
instructions as the commissioner approves; provided, however, that
the provisions of this subdivision apply only to an owner,
subdivider, or agent who proposes to sell or lease the lots or
parcels with improvements thereon in the nature of residential
structures.
(f) There is conformance to such other alternative requirement or
method the commissioner deems acceptable to carry into effect the
intent and provisions of this part.

11013.5. The public report of the commissioner, when issued, shall
indicate the method or procedure selected by the owner or subdivider
to comply with the provisions of Sections 11013.1, 11013.2 or
11013.4.

11014. The commissioner may investigate any subdivision being
offered for sale or lease in this State. For the purposes of such
investigations the commissioner may use and rely upon any relevant
information or data concerning a subdivision obtained by him from the
Federal Housing Administration, the United States Veterans
Administration or any other federal agency having comparable duties
and functions in relation to subdivisions or property therein.

11018. The Real Estate Commissioner shall make an examination of
any subdivision, and shall, unless there are grounds for denial,
issue to the subdivider a public report authorizing the sale or lease
in this state of the lots or parcels within the subdivision. The
report shall contain the data obtained in accordance with Section
11010 and which the commissioner determines are necessary to
implement the purposes of this article. The commissioner may publish
the report.
The grounds for denial are:
(a) Failure to comply with any of the provisions in this chapter
or the regulations of the commissioner pertaining thereto.
(b) The sale or lease would constitute misrepresentation to or
deceit or fraud of the purchasers or lessees.
(c) Inability to deliver title or other interest contracted for.
(d) Inability to demonstrate that adequate financial arrangements
have been made for all offsite improvements included in the offering.
(e) Inability to demonstrate that adequate financial arrangements
have been made for any community, recreational or other facilities
included in the offering.
(f) Failure to make a showing that the parcels can be used for the
purpose for which they are offered; and in the case of a subdivision
being offered for residential purposes failure to make a showing
that vehicular access and a source of potable domestic water either
is available or will be available.
(g) Failure to provide in the contract or other writing the use or
uses for which the parcels are offered, together with any covenants
or conditions relative thereto.
(h) Agreements or bylaws to provide for management or other
services pertaining to common facilities in the offering, which fail
to comply with the regulations of the commissioner.
(i) Failure to demonstrate that adequate financial arrangements
have been made for any guaranty or warranty included in the offering.

11018.1. (a) A copy of the public report of the commissioner, when
issued, shall be given to the prospective purchaser by the owner,
subdivider or agent prior to the execution of a binding contract or
agreement for the sale or lease of any lot or parcel in a
subdivision. The requirement of this section extends to lots or
parcels offered by the subdivider after repossession. A receipt shall
be taken from the prospective purchaser in a form and manner as set
forth in regulations of the Real Estate Commissioner.
(b) A copy of the public report shall be given by the owner,
subdivider or agent at any time, upon oral or written request, to any
member of the public. A copy of the public report and a statement
advising that a copy of the public report may be obtained from the
owner, subdivider or agent at any time, upon oral or written request,
shall be posted in a conspicuous place at any office where sales or
leases or offers to sell or lease lots within the subdivision are
regularly made.
(c) At the same time that a public report is required to be given
by the owner, subdivider, or agent pursuant to subdivision (a) with
respect to a common interest development, as defined, in subdivision
(c) of Section 1351 of the Civil Code, the owner, subdivider, or
agent shall give the prospective purchaser a copy of the following
statement:

"COMMON INTEREST DEVELOPMENT GENERAL INFORMATION

The project described in the attached Subdivision Public Report is
known as a common-interest development. Read the public report
carefully for more information about the type of development. The
development includes common areas and facilities which will be owned
or operated by an owners' association. Purchase of a lot or unit
automatically entitles and obligates you as a member of the
association and, in most cases, includes a beneficial interest in the
areas and facilities. Since membership in the association is
mandatory, you should be aware of the following information before
you purchase:
Your ownership in this development and your rights and remedies as
a member of its association will be controlled by governing
instruments which generally include a Declaration of Restrictions
(also known as CC&R's), Articles of Incorporation (or association)
and bylaws. The provisions of these documents are intended to be, and
in most cases are, enforceable in a court of law. Study these
documents carefully before entering into a contract to purchase a
subdivision interest.
In order to provide funds for operation and maintenance of the
common facilities, the association will levy assessments against your
lot or unit. If you are delinquent in the payment of assessments,
the association may enforce payment through court proceedings or your
lot or unit may be liened and sold through the exercise of a power
of sale. The anticipated income and expenses of the association,
including the amount that you may expect to pay through assessments,
are outlined in the proposed budget. Ask to see a copy of the budget
if the subdivider has not already made it available for your
examination.
A homeowner association provides a vehicle for the ownership and
use of recreational and other common facilities which were designed
to attract you to buy in this development. The association also
provides a means to accomplish architectural control and to provide a
base for homeowner interaction on a variety of issues. The purchaser
of an interest in a common-interest development should contemplate
active participation in the affairs of the association. He or she
should be willing to serve on the board of directors or on committees
created by the board. In short, "they" in a common interest
development is "you." Unless you serve as a member of the governing
board or on a committee appointed by the board, your control of the
operation of the common areas and facilities is limited to your vote
as a member of the association. There are actions that can be taken
by the governing body without a vote of the members of the
association which can have a significant impact upon the quality of
life for association members.
Until there is a sufficient number of purchasers of lots or units
in a common interest development to elect a majority of the governing
body, it is likely that the subdivider will effectively control the
affairs of the association. It is frequently necessary and equitable
that the subdivider do so during the early stages of development. It
is vitally important to the owners of individual subdivision
interests that the transition from subdivider to resident-owner
control be accomplished in an orderly manner and in a spirit of
cooperation.
When contemplating the purchase of a dwelling in a common interest
development, you should consider factors beyond the attractiveness
of the dwelling units themselves. Study the governing instruments and
give careful thought to whether you will be able to exist happily in
an atmosphere of cooperative living where the interests of the group
must be taken into account as well as the interests of the
individual. Remember that managing a common interest development is
very much like governing a small community ... the management can
serve you well, but you will have to work for its success."

Failure to provide the statement in accordance with this
subdivision shall not be deemed a violation subject to Section 10185.

11018.2. No person shall sell or lease, or offer for sale or lease
in this state any lots or parcels in a subdivision without first
obtaining a public report from the Real Estate Commissioner. This
section shall not apply to subdivisions for which a notice of
intention is not required under the provisions of this chapter.

11018.3. Any subdivider objecting to the denial of a public report
may, within 30 days after receipt of the order of denial, file a
written request for a hearing. The commissioner shall hold the
hearing within 20 days thereafter unless the party requesting the
hearing requests a postponement. If the hearing is not held within 20
days after request for a hearing is received plus the period of the
postponement or if a proposed decision is not rendered within 45 days
after submission and an order adopting or rejecting the proposed
decision is not issued within 15 days thereafter, the order of denial
shall be rescinded and a public report issued.

11018.5. With respect to the subdivisions and interests of the type
described in Section 11004.5, and in addition to the other grounds
for denial of a public report as set forth in this code, the
commissioner shall issue a public report if the commissioner finds
the following with respect to any such subdivision or interest:
(a) (1) Reasonable arrangements have been made to assure
completion of the subdivision and all offsite improvements included
in the offering.
(2) If the condominium or community apartment project, stock
cooperative or planned development, or premises or facilities within
the common area are not completed prior to the issuance of a final
subdivision public report on the project, the subdivider shall
specify a reasonable date for completion and shall comply with one of
the following conditions:
(A) Arranges for lien and completion bond or bonds in an amount
and subject to such terms, conditions and coverage as the
commissioner may approve to assure completion of the improvements
lien free.
(B) All funds from the sale of lots or parcels or such portions
thereof as the commissioner shall determine are sufficient to assure
construction of the improvement or improvements, shall be impounded
in a neutral escrow depository acceptable to the commissioner until
the improvements have been completed and all applicable lien periods
have expired; provided, however, the commissioner determines the time
for the completion is reasonable.
(C) An amount sufficient to cover the costs of construction shall
be deposited in a neutral escrow depository acceptable to the
commissioner under a written agreement providing for disbursements
from that escrow as work is completed.
(D) If the project is a condominium situated on a single parcel as
shown on an approved final subdivision map, arrange for (i) lien and
completion bond or bonds in an amount sufficient to assure lien-free
completion of all common area improvements not located in a
residential structure, and (ii) placement of all funds, or such
portions thereof as the commissioner shall determine are sufficient,
from the sales of condominium interests in a neutral escrow
depository acceptable to the commissioner. The funds for purchase or
lease of the condominium interest shall remain in the escrow account
until the residential structure in which the purchaser's separate
unit is located has been completed, and all lien periods applicable
to the purchaser's separate and undivided interests in the entire
project arising out of the work of improvement performed by either
the subdivider or any successor in interest to the subdivider have
expired or have been insured against in a manner satisfactory to the
commissioner.
(E) Such other alternative plan as may be approved by the
commissioner.
(b) The deeds, conveyances, leases, subleases, or instruments or
assignment to be used are adequate to transfer to the purchasers the
legal interests and uses which the owner or subdivider represents the
purchasers will receive.
(c) After transfer of title to the first lot, apartment, or
condominium in the subdivision to any purchaser, the provisions of
the declaration of restrictions, articles of incorporation, bylaws,
management contracts (and the provisions of any and all other
documents establishing, in whole or in part, the plan for use,
enjoyment, maintenance, and preservation of the subdivision) as last
submitted to the commissioner prior to issuance of the final public
report, shall be binding upon the purchaser and occupant of every
other lot, apartment, or condominium in the subdivision, including,
except with regard to a limited-equity housing cooperative,
purchasers acquiring title by foreclosure, whether judicial or
nonjudicial, or by deed in lieu thereof, under any mortgage or deed
of trust, whether or not the mortgage or deed of trust was recorded
prior to recordation of the covenants, conditions and restrictions
applicable to the first lot, apartment, or condominium.
(d) Reasonable arrangements have been made for delivery of control
over the subdivision and all offsite land and improvements included
in the offering, to the purchasers of lots, apartments, or
condominiums in the subdivision.
(e) Reasonable arrangements have been or will be made as to the
interest of each of the purchasers of lots, apartments, or
condominiums in the subdivision with respect to the management,
maintenance, preservation, operation, use, right of resale, and
control of their lots, apartments, or condominiums, and such other
areas or interests, whether or not within, or pertaining to, areas
within the boundaries of the subdivision, as have been or will be
made subject to the plan of control proposed by the owner and
subdivider, and which are included in the offering.
"Purchaser," as used in this section, shall include within its
meaning a lessee of the legal interests described in Section 11003 of
this code.

11018.6. Any person offering to sell or lease any interest subject
to the requirements of subdivision (a) of Section 11018.1 in a
subdivision described in Section 11004.5 shall make a copy of each of
the following documents available for examination by a prospective
purchaser or lessee before the execution of an offer to purchase or
lease and shall give a copy thereof to each purchaser or lessee as
soon as practicable before transfer of the interest being acquired by
the purchaser or lessee:
(a) The declaration of covenants, conditions, and restrictions for
the subdivision.
(b) Articles of incorporation or association for the subdivision
owners association.
(c) Bylaws for the subdivision owners association.
(d) Any other instrument which establishes or defines the common,
mutual, and reciprocal rights, and responsibilities of the owners or
lessees of interests in the subdivision as shareholders or members of
the subdivision owners association or otherwise.
(e) To the extent available, the current financial information and
related statements as specified in subdivision (a) of Section 1365
of the Civil Code, for subdivisions subject to those provisions.
(f) A statement prepared by the governing body of the association
setting forth the outstanding delinquent assessments and related
charges levied by the association against the subdivision interests
in question under authority of the governing instruments for the
subdivision and association.

11018.7. (a) No amendment or modification of provisions in the
declaration of restrictions, bylaws, articles of incorporation or
other instruments controlling or otherwise affecting rights to
ownership, possession, or use of interests in subdivisions as defined
in Sections 11000.1 and 11004.5 which would materially change those
rights of an owner, either directly or as a member of an association
of owners, is valid without the prior written consent of the Real
Estate Commissioner during the period of time when the subdivider or
his or her successor in interest holds or directly controls as many
as one-fourth of the votes that may be cast to effect that change.
(b) The commissioner shall not grant his or her consent to the
submission of the proposed change to a vote of owners or members if
he or she finds that the change if effected would create a new
condition or circumstance that would form the basis for denial of a
public report under Sections 11018 or 11018.5.
An application for consent may be filed by any interested person
on a form prescribed by the commissioner. A filing fee to be fixed by
regulation, but not to exceed twenty-five dollars ($25), shall
accompany each application.
There shall be no official meeting of owners or members nor any
written solicitation of them for the purpose of effectuating a change
referred to herein except in accordance with a procedure approved by
the commissioner after the application for consent has been filed
with him or her; provided, however, that the governing body of the
owners association may meet and vote on the question of submission of
the proposed change to the commissioner.

11018.12. (a) The commissioner may issue a conditional public
report for a subdivision specified in Section 11004.5 if the
requirements of subdivision (e) are met, all deficiencies and
substantive inadequacies in the documents that are required to make
an application for a final public report for the subdivision
substantially complete have been corrected, the material elements of
the setup of the offering to be made under the authority of the
conditional public report have been established, and all requirements
for the issuance of a public report set forth in the regulations of
the commissioner have been satisfied, except for one or more of the
following requirements, as applicable:
(1) A final map has not been recorded.
(2) A condominium plan pursuant to subdivision (e) of Section 1351
of the Civil Code has not been recorded.
(3) A declaration of covenants, conditions, and restrictions
pursuant to Section 1353 of the Civil Code has not been recorded.
(4) A declaration of annexation has not been recorded.
(5) A recorded subordination of existing liens to the declaration
of covenants, conditions, and restrictions or declaration of
annexation, or escrow instructions to effect recordation prior to the
first sale, are lacking.
(6) Filed articles of incorporation are lacking.
(7) A current preliminary report of a licensed title insurance
company issued after filing of the final map and recording of the
declaration covering all subdivision interests to be included in the
public report has not been provided.
(8) Other requirements the commissioner determines are likely to
be timely satisfied by the applicant, notwithstanding the fact that
the failure to meet these requirements makes the application
qualitatively incomplete.
(b) The commissioner may issue a conditional public report for a
subdivision not referred to or specified in Section 11000.1 or
11004.5 if the requirements of subdivision (e) are met, all
deficiencies and substantive inadequacies in the documents that are
required to make an application for a final public report for the
subdivision substantially complete have been corrected, the material
elements of the setup of the offering to be made under the authority
of the conditional public report have been established, and all
requirements for issuance of a public report set forth in the
regulations of the commissioner have been satisfied, except for one
or more of the following requirements, as applicable:
(1) A final map has not been recorded.
(2) A declaration of covenants, conditions, and restrictions has
not been recorded.
(3) A current preliminary report of a licensed title insurance
company issued after filing of the final map and recording of the
declaration covering all subdivision interests to be included in the
public report has not been provided.
(4) Other requirements the commissioner determines are likely to
be timely satisfied by the applicant, notwithstanding the fact that
the failure to meet these requirements makes the application
qualitatively incomplete.
(c) A decision by the commissioner to not issue a conditional
public report shall be noticed in writing to the applicant within
five business days and that notice shall specifically state the
reasons why the report is not being issued.
(d) Notwithstanding the provisions of Section 11018.2, a person
may sell or lease, or offer for sale or lease, lots or parcels in a
subdivision pursuant to a conditional public report if, as a
condition of the sale or lease or offer for sale or lease, delivery
of legal title or other interest contracted for will not take place
until issuance of a public report and provided that the requirements
of subdivision (e) are met.
(e) (1) Evidence shall be supplied that all purchase money will be
deposited in compliance with subdivision (a) of Section 11013.2 or
subdivision (a) of Section 11013.4, and in the case of a subdivision
referred to in subdivision (a) of this section, evidence shall be
given of compliance with paragraphs (1) and (2) of subdivision (a) of
Section 11018.5.
(2) A description of the nature of the transaction shall be
supplied.
(3) Provision shall be made for the return of the entire sum of
money paid or advanced by the purchaser if a subdivision public
report has not been issued during the term of the conditional public
report, or as extended, or the purchaser is dissatisfied with the
public report because of a change pursuant to Section 11012.
(f) A subdivider, principal, or his or her agent shall provide a
prospective purchaser a copy of the conditional public report and a
written statement including all of the following:
(1) Specification of the information required for issuance of a
public report.
(2) Specification of the information required in the public report
that is not available in the conditional public report, along with a
statement of the reasons why that information is not available at
the time of issuance of the conditional public report.
(3) A statement that no person acting as a principal or agent
shall sell or lease, or offer for sale or lease, lots or parcels in a
subdivision for which a conditional public report has been issued
except as provided in this article.
(4) Specification of the requirements of subdivision (e).
(g) The prospective purchaser shall sign a receipt that he or she
has received and has read the conditional public report and the
written statement provided pursuant to subdivision (f).
(h) The term of a conditional public report shall not exceed six
months, and may be renewed for one additional term of six months if
the commissioner determines that the requirements for issuance of a
public report are likely to be satisfied during the renewal term.
(i) The term of a conditional public report for attached
residential condominium units, as defined pursuant to Section 783 of
the Civil Code, consisting of 25 units or more as specified on the
approved tentative tract map, shall not exceed 30 months and may be
renewed for one additional term of six months if the commissioner
determines that the requirements for issuance of a public report are
likely to be satisfied during the renewal term.

11018.13. (a) After written notice to the subdivider, or the
subdivider's representative, the commissioner may abandon any
application for a subdivision public report if the data required by
Section 11010 has not been furnished within three years from the date
a notice of intention is filed for a subdivision public report.
(b) The commissioner shall adopt regulations establishing time
periods for notifying the subdivider, or the subdivider's
representative, of the intention to abandon a file, and establishing
hardship or justifiable extenuating circumstances the commissioner
deems acceptable.

11018.14. The commissioner shall not be a responsible agency for
purposes of the California Environmental Quality Act (Division 13
(commencing with Section 21000), Public Resources Code). Receipt by
the commissioner of a copy of an environmental impact report or
negative declaration prepared pursuant to the California
Environmental Quality Act shall be conclusive evidence of compliance
with that act for purposes of issuing a subdivision public report.

11019. (a) Whenever the commissioner determines from available
evidence that a person has done any of the following, the
commissioner may order the person to desist and refrain from those
acts and omissions or from the further sale or lease of interests in
the subdivision until the condition has been corrected:
(1) Has violated or caused the violation of any provision of this
part or the regulations pertaining thereto.
(2) Has violated or caused a violation of Section 17537, 17537.1,
or 17539.1, in advertising or promoting the sale of subdivision
interests.
(3) Has failed to fulfill representations or assurances with
respect to the subdivision or the subdivision offering upon which the
department relied in issuing a subdivision public report.
(4) Has failed to inform the department of material changes that
have occurred in the subdivision or subdivision offering which have
caused the subdivision public report to be misleading or inaccurate
or which would have caused the department to deny a public report if
the conditions had existed at the time of issuance.
(b) Upon receipt of such an order, the person or persons to whom
the order is directed shall immediately discontinue activities in
accordance with the terms of the order.
(c) Any person to whom the order is directed may, within 30 days
after service thereof upon him, file with the commissioner a written
request for hearing to contest the order. The commissioner shall
after receipt of a request for hearing assign the matter to the
Office of Administrative Hearings to conduct a hearing for findings
of fact and determinations of the issues set forth in the order. If
the hearing is not commenced within 15 days after receipt of the
request for hearing, or on the date to which continued with the
agreement of the person requesting the hearing, or if the decision of
the commissioner is not rendered within 30 days after completion of
the hearing, the order shall be deemed to be vacated.
(d) Service and proof of service of an order issued by the
commissioner pursuant to this section may be made in a manner and
upon such persons as prescribed for the service of summons in Article
3 (commencing with Section 415.10), Article 4 (commencing with
Section 416.10) and Article 5 (commencing with Section 417.10) of
Chapter 4 of Title 5 of Part 2, of the Code of Civil Procedure.

11020. (a) It shall be unlawful for any person to make, issue,
publish, deliver, or transfer as true and genuine any public report
which is forged, altered, false, or counterfe