BILL NUMBER: AB 1024 INTRODUCED
BILL TEXT
INTRODUCED BY Assembly Member Torres
FEBRUARY 22, 2013
An act to amend Sections 11000.1, 11003.4, 11013.1, and 11013.2
of, and to add Section 11013.6 to, the Business and Professions Code,
to add Section 5146 to the Civil Code, and to amend Section 66426 of
the Government Code, relating to land use.
LEGISLATIVE COUNSEL'S DIGEST
AB 1024, as introduced, Torres. Real property: divided lands.
(1) Existing law generally governs real estate transactions,
including transactions involving subdivided lands. Existing law
requires any person who intends to offer subdivided lands within
California for sale or lease to file with the Department of Real
Estate an application for a public report, consisting of a completed
questionnaire and a notice of intention that includes, among other
things, a statement of the proposed uses for which the proposed
subdivision will be offered. Existing law provides a person who has
made an offer to purchase an interest in an undivided-interest
subdivision, as specified, the right to rescind any contract
resulting from the acceptance of that offer until midnight of the 3rd
calendar day following the day on which the prospective purchaser
executed the offer to purchase. Existing law makes a violation of
these provisions a crime.
Existing law exempts from the definition of "subdivided lands" and
"subdivision" the creation or proposed creation of undivided
interests in land if the offering and sale of the undivided interests
have been expressly qualified by a permit from the Commissioner of
Corporations.
This bill would revise the above-described exemption to apply to
the offering and sale of undivided interests in a stock cooperative
or community apartment project that is exempt from specified
securities requirements, as well as to the offering and sale of
undivided interests in a common interest development that has been so
expressly qualified.
(2) Existing law exempts a limited-equity housing cooperative or a
workforce housing cooperative trust from provisions of existing law
governing subdivided land transactions that are applicable to stock
cooperatives if the limited-equity housing cooperative or workforce
housing cooperative trust complies with specified conditions.
This bill would revise the conditions for the exemption to, among
other things, require that every party that executes a regulatory
agreement with the cooperative satisfy itself that the rights of the
cooperative members are provided adequate protection, as specified.
By expanding the applicability of a crime, this bill would impose a
state-mandated local program.
(3) Existing law prohibits the sale or lease of lots or parcels
within a subdivision that is subject to a blanket encumbrance unless
the encumbrance includes a specified release clause or certain
conditions are met.
This bill would authorize the sale or lease of an individual
interest in a defined stock cooperative or limited housing
cooperative that is subject to a blanket encumbrance if a specified
condition is met.
(4) The Davis-Stirling Common Interest Development Act establishes
procedures for elections.
This bill would exempt a stock cooperative with bylaws that
provide that all members and shareholders automatically become
directors of the homeowners' association from the procedures
applicable to the election of directors of the homeowners'
association.
(5) The existing Subdivision Map Act requires a tentative and
final map for all subdivisions creating 5 or more parcels, 5 or more
condominiums, as defined, a community apartment project containing 5
or more parcels, or for the conversion of a dwelling to a stock
cooperative containing 5 or more dwelling units, except as specified.
This bill would delete from the above-described requirement a
community apartment project containing 5 or more parcels and the
conversion of a dwelling to a stock cooperative containing 5 or more
dwelling units.
(6) The California Constitution requires the state to reimburse
local agencies and school districts for certain costs mandated by the
state. Statutory provisions establish procedures for making that
reimbursement.
This bill would provide that no reimbursement is required by this
act for a specified reason.
Vote: majority. Appropriation: no. Fiscal committee: yes.
State-mandated local program: yes.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. Section 11000.1 of the Business and Professions Code is
amended to read:
11000.1. (a) "Subdivided lands" and "subdivision," as defined by
Sections 11000 and 11004.5, also include improved or unimproved land
or lands, a lot or lots, or a parcel or parcels, of any size, in
which, for the purpose of sale or lease or financing, whether
immediate or future, five or more undivided interests are created or
are proposed to be created.
(b) This section does not apply to the creation or proposed
creation of undivided interests in land if any one of the following
conditions exists:
(1) The undivided interests are held or to be held by persons
related one to the other by blood or marriage.
(2) The undivided interests are to be purchased and owned solely
by persons who present evidence satisfactory to the Real Estate
Commissioner that they are knowledgeable and experienced investors
who comprehend the nature and extent of the risks involved in the
ownership of these interests. The Real Estate Commissioner shall
grant an exemption from this part if the undivided interests are to
be purchased by no more than 10 persons, each of whom furnishes a
signed statement to the commissioner that he or she (A) is fully
informed concerning the real property to be acquired and his or her
interest in that property including the risks involved in ownership
of undivided interests, (B) is purchasing the interest or interests
for his or her own account and with no present intention to resell or
otherwise dispose of the interest for value, and (C) expressly
waives protections afforded to a purchaser by this part.
(3) The undivided interests are created as the result of a
foreclosure sale.
(4) The undivided interests are created by a valid order or decree
of a court.
(5) The offering and sale of the undivided interests have
in a stock cooperative or community apartment project
is exempt from the requirements of Section 25110 of the Corporations
Code pursuant to subdivision (f) of Section 25102 of that code.
(6) The offering and sale of
undivided interests in a common interest development have
been expressly qualified by the issuance of a permit from the
Commissioner of Corporations pursuant to the Corporate Securities Law
of 1968 (Division 1 (commencing with Section 25000) of Title 4 of
the Corporations Code).
SEC. 2. Section 11003.4 of the Business and Professions Code is
amended to read:
11003.4. (a) A "limited-equity housing cooperative" or a
"workforce housing cooperative trust" is a corporation that meets the
criteria of Section 11003.2 and that also meets the criteria of
Sections 817 and 817.1 of the Civil Code, as applicable. Except as
provided in subdivision (b), a limited-equity housing or workforce
housing cooperative trust shall be subject to all the requirements of
this chapter pertaining to stock cooperatives.
(b) A limited-equity housing cooperative or a workforce housing
cooperative trust shall be exempt from the requirements of this
chapter if the limited-equity housing cooperative or workforce
housing cooperative trust complies with all the following conditions:
(1) The United States Department of Housing and Urban Development,
the United States Department of Agriculture, the National Consumers
Cooperative Bank, the California Housing Finance Agency, the Public
Employees' Retirement System (PERS), the State Teachers' Retirement
System (STRS), the Department of Housing and Community Development,
or the Federal Home Loan Bank System or any of its
member institutions, alone or in any combination with each
other, or with a state or federally chartered credit
union, a state or federally certified community development financial
institution, or the city, county, school district, or
redevelopment agency in which the cooperative is located, alone
or in any combination with each other, directly finances or
subsidizes at least 50 percent of the total construction or
development cost or one hundred thousand dollars ($100,000),
whichever is less; or the real property to be occupied by the
cooperative was sold or leased by the Department of Transportation,
other state agency, a city, a county, or a school district for the
development of the cooperative and has a regulatory agreement
approved by the Department of Housing and Community Development for
the term of the permanent financing, notwithstanding the source of
the permanent subsidy or financing.
(2) No more than 20 percent of the total development cost of a
limited-equity mobilehome park, and no more than 10 percent of the
total development cost of other limited-equity housing cooperatives,
is provided by purchasers of membership shares.
(3) A regulatory agreement that covers the cooperative for a term
of at least as long as the duration of the permanent financing or
subsidy, notwithstanding the source of the permanent subsidy or
financing has been duly executed between the recipient of the
financing and either (A) one of the federal or state agencies
specified in paragraph (1) or (B) a local public agency that is
providing financing for the project under a regulatory agreement
meeting standards of the Department of Housing and Community
Development. The regulatory agreement shall make provision for at
least all of the following:
(A) Assurances for completion of the common areas and facilities
to be owned or leased by the limited-equity housing cooperative,
unless a construction agreement between the same parties contains
written assurances for completion.
(B) Governing instruments for the organization and operation of
the housing cooperative by the members.
(C) The ongoing fiscal management of the project by the
cooperative, including an adequate budget, reserves, and provisions
for maintenance and management.
(D) Distribution of a membership information report to any
prospective purchaser of a membership share, prior to purchase of
that share. The membership information report shall contain full
disclosure of the financial obligations and responsibilities of
cooperative membership, the resale of shares, the financing of the
cooperative including any arrangements made with any partners,
membership share accounts, occupancy restrictions, management
arrangements, and any other information pertinent to the benefits,
risks, and obligations of cooperative ownership.
(4) The federal, state, or local public agency
Every party that executes the regulatory
agreement shall satisfy itself that the bylaws, articles of
incorporation, occupancy agreement, subscription agreement, any lease
of the regulated premises, any arrangement with partners, and
arrangement for membership share accounts provide adequate protection
of the rights of cooperative members.
(5) The federal or state agency Every
provider of financing or subsidies shall receive from the
attorney for the recipient of the financing or subsidy a legal
opinion that the cooperative meets the requirements of Section 817 of
the Civil Code and the exemption provided by this section.
(c) Any limited-equity cooperative, or workforce housing
cooperative trust that meets the requirements for exemption pursuant
to subdivision (b) may elect to be subject to all provisions of this
chapter.
(d) The developer of the cooperative shall notify the
Department Bureau of Real Estate, on a form
provided by the department, that an exemption is claimed under this
section. The Department Bureau of Real
Estate shall retain this form for at least four years for statistical
purposes.
SEC. 3. Section 11013.1 of the Business and Professions Code is
amended to read:
11013.1. It shall be unlawful, except as provided in Section
11013.2 or 11013.3 , 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
the 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 the
blanket encumbrance, upon compliance with the terms and
conditions of the purchase or lease.
SEC. 4. Section 11013.2 of the Business and Professions Code is
amended to read:
11013.2. Should there not exist in If
the blanket encumbrance or supplementary agreement
does not include 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
the 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 the lot or parcel,
or such a 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
any of the following occur:
(1) A proper release is obtained
from such the blanket
encumbrance; or (2) either encumbrance.
(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 the moneys.
(3) The owner, subdivider, or
agent orders the return of such the
moneys to such this 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 the 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 the lots or parcels, in
such an amount and subject to
such the 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 the lot
or parcel if a proper release from such the
blanket encumbrance is not obtained; provided, however, that if
it should be determined that such the
purchaser or lessee, by reason of default or otherwise, is not
entitled to the return of such the
moneys, or any portion thereof, then such the
bond shall be exonerated to the extent of the amount of
such the moneys to which such
the purchaser or lessee is not entitled.
(d) There is conformance to such other
another alternative requirement or method which
that the commissioner may deem acceptable to
carry into effect the intent and provisions of this part.
(e) The sale or lease subject to the blanket encumbrance is
described in Section 11013.3.
SEC. 5. Section 11013.6 is added to the Business and Professions
Code, to read:
11013.6. Notwithstanding Sections 11013.1 and 11013.2, an
individual interest in a stock cooperative, as defined in Section
11003.2, or a limited equity housing cooperative, as defined in
Section 817 of the Civil Code, may be sold or leased subject to a
blanket encumbrance if any of the following conditions are met:
(a) The property subject to the sale has obtained a public report
from the Bureau of Real Estate.
(b) The notice required pursuant to Section 1133 of the Civil Code
is provided to every prospective purchaser of the interest and is
included in every purchase contract.
(c) The governing documents of a homeowners association for a
stock cooperative require the association to create within one year
of the sale of at least 50 percent of the individual interest in the
stock cooperative and maintain during the term of the blanket
encumbrance a financing reserve amount equal to at least three months
of the amount of the debt service payments due on the blanket
encumbrance.
(d) Every purchaser of an individual interest in the stock
cooperative is an excluded purchaser, as defined in Section
260.102.13 of Title 10 of the California Code of Regulations.
SEC. 6. Section 5146 is added to the Civil Code, to read:
5146. Except for Section 5145, the provisions of this article
applicable to the election of directors of a homeowners' association
shall not apply to a stock cooperative with bylaws that provide that
all members and shareholders automatically become directors of the
homeowners' association.
SEC. 7. Section 66426 of the Government Code is amended to read:
66426. A tentative and final map shall be required for all
subdivisions creating five or more parcels ,
or five or more condominiums , as defined in Section
783 of the Civil Code, a community apartment project
containing five or more parcels, or for the conversion of a dwelling
to a stock cooperative containing five or more dwelling units,
except where any one of the following occurs:
(a) The land before division contains less than five acres, each
parcel created by the division abuts upon a maintained public street
or highway, and no dedications or improvements are required by the
legislative body.
(b) Each parcel created by the division has a gross area of 20
acres or more and has an approved access to a maintained public
street or highway.
(c) The land consists of a parcel or parcels of land having
approved access to a public street or highway, which comprises part
of a tract of land zoned for industrial or commercial development,
and which has the approval of the governing body as to street
alignments and widths.
(d) Each parcel created by the division has a gross area of not
less than 40 acres or is not less than a quarter of a quarter
section.
(e) The land being subdivided is solely for the creation of an
environmental subdivision pursuant to Section 66418.2.
(f) A parcel map shall be required for those subdivisions
described in subdivisions (a), (b), (c), (d), and (e).
SEC. 8. No reimbursement is required by this act pursuant to
Section 6 of Article XIII B of the California Constitution because
the only costs that may be incurred by a local agency or school
district will be incurred because this act creates a new crime or
infraction, eliminates a crime or infraction, or changes the penalty
for a crime or infraction, within the meaning of Section 17556 of the
Government Code, or changes the definition of a crime within the
meaning of Section 6 of Article XIII B of the California
Constitution.