BILL NUMBER: AB 1024 AMENDED
BILL TEXT
AMENDED IN ASSEMBLY APRIL 10, 2013
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,
and 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 amended, 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 conditions
are 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)
(5) 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 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,
the Federal Home Loan Bank System or any of its member institutions,
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) 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) 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 Bureau of
Real Estate, on a form provided by the department, that an exemption
is claimed under this section. The 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 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 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. 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 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 the lot or parcel, or 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 any of the following occur:
(1) A proper release is obtained from the blanket 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 the moneys.
(3) The owner, subdivider, or agent orders the return of the
moneys to 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 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 the lots or parcels, in an amount and subject to 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 the lot or parcel if a proper
release from the blanket encumbrance is not obtained; provided,
however, that if it should be determined that the purchaser or
lessee, by reason of default or otherwise, is not entitled to the
return of the moneys, or any portion thereof, then the bond shall be
exonerated to the extent of the amount of the moneys to which the
purchaser or lessee is not entitled.
(d) There is conformance to another alternative requirement or
method 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 11013.6 .
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 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 and 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)
(b) 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)
(c) 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, 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. SEC. 7. 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.