BILL NUMBER: AB 728 AMENDED
BILL TEXT
AMENDED IN SENATE JUNE 25, 2003
AMENDED IN ASSEMBLY APRIL 10, 2003
INTRODUCED BY Assembly Member Leno
FEBRUARY 19, 2003
An act to amend Sections 11000.1 and 11018.12 of the Business and
Professions Code, to amend Section 1675 of the Civil Code, and to
amend Sections 66427 and 66452.4 of the Government Code, relating to
subdivided lands.
LEGISLATIVE COUNSEL'S DIGEST
AB 728, as amended, Leno. Real estate: subdivisions.
(1) Existing law provides for the regulation of real estate
transactions, including subdivided lands transactions and defines
"subdivided lands" and "subdivision" for these purposes with the
exception of undivided interests that meet specified conditions.
Existing law also defines "subdivided lands" and "subdivision" to
include, among other things, any condominium project containing 5 or
more condominiums, as defined, and authorizes the Real Estate
Commissioner to issue a conditional public report when "subdivided
lands" or a "subdivision" are offered for sale to the public and
specified requirements are met.
This bill would make a clarifying change to these provisions and
would extend the term of a conditional public report from 6 months to
3 years and a term of renewal from one additional term to additional
terms of 6 months each, as specified.
(2) Existing law provides that a provision for the payment of
liquidated damages in a contract to purchase and sell residential
property is valid if the amount actually paid by a buyer who fails to
complete the purchase of the property does not exceed 3% of the
contract price unless the buyer establishes that the amount is
unreasonable. If the amount actually paid exceeds 3% of the purchase
price, the provision is invalid unless the party seeking to uphold
the provision establishes that the amount actually paid is
reasonable.
This bill would delete these provisions and instead
provide that for the initial sale of a newly
constructed condominium, the amount actually paid pursuant to a
liquidated damages provision is valid to the extent that payment is
actually made unless the buyer establishes that the amount is
unreasonable as liquidated damages.
(3) The Subdivision Map Act provides that a governing body may
not, among other things, refuse approval of a parcel, tentative, or
final map of a condominium project on account of the design or the
location of buildings on the property shown on the map that are not
violative of local ordinances.
This bill would in addition provide that a governing body may not
refuse approval of a parcel, tentative, or final map of a condominium
project on account of the absence of a condominium plan or plans, as
defined.
(4) The Subdivision Map Act requires that a tentative map is
deemed to be validly approved if no action is taken upon a tentative
map by an authorized advisory agency or the legislative body of a
city or county to approve, conditionally approve, or disapprove the
tentative map within the time limits specified in the act, and the
tentative map complies with applicable requirements of the act and
local ordinances enacted pursuant to the act.
This bill would require that a subdivider whose subdivision is
deemed approved pursuant to these provisions is entitled, upon
request of the local agency or the legislative body, to receive a
written certification of approval. By increasing the duties of local
public officials, the bill would impose a state-mandated local
program.
(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 (1) is fully
informed concerning the real property to be acquired and his or her
interest therein including the risks involved in ownership of
undivided interests, and (2) 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 (3) 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 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).
(6) The real property is offered for sale as a time-share project
as defined in Section 11003.5.
SEC. 2. Section 11018.12 of the Business and Professions Code is
amended to read:
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 within six months of the date of
issuance 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 three
years, and may be renewed for additional terms of six months each if
the commissioner determines that the requirements for issuance of a
public report are likely to be satisfied during the renewal term.
SEC. 3. Section 1675 of the Civil Code is amended to read:
1675. (a) As used in this section, "residential property" means
real property primarily consisting of a dwelling that meets both of
the following requirements:
(1) The dwelling contains not more than four residential units.
(2) At the time the contract to purchase and sell the property is
made, the buyer intends to occupy the dwelling or one of its units as
his residence.
(b) A provision in a contract to purchase and sell residential
property that provides that all or any part of a payment made by the
buyer shall constitute liquidated damages to the seller upon the
buyer's failure to complete the purchase of the property is valid to
the extent that payment in the form of cash or check, including a
postdated check, is actually made if the provision satisfies the
requirements of Sections 1677 and 1678 and subdivision (c) of this
section.
(c) The amount actually paid pursuant to the liquidated damages
provision is valid to the extent that payment is actually made unless
the buyer establishes that the amount is unreasonable as liquidated
damages.
(d) For the purposes of subdivision (c), the reasonableness of an
amount actually paid as liquidated damages shall be determined by
taking into account both of the following:
(1) The circumstances existing at the time the contract was made.
(2) The price and other terms and circumstances of any subsequent
sale or contract to sell and purchase the same property if such sale
or contract is made within six months of the buyer's default.
SEC. 3. Section 1675 of the Civil Code is amended to read:
1675. (a) As used in this section, "residential property" means
real property primarily consisting of a dwelling that meets both of
the following requirements:
(1) The dwelling contains not more than four residential units.
(2) At the time the contract to purchase and sell the property is
made, the buyer intends to occupy the dwelling or one of its units as
his or her residence.
(b) A provision in a contract to purchase and sell residential
property which that provides that all
or any part of a payment made by the buyer shall constitute
liquidated damages to the seller upon the buyer's failure to complete
the purchase of the property is valid to the extent that payment in
the form of cash or check, including a postdated check, is actually
made if the provision satisfies the requirements of Sections 1677 and
1678 and of either subdivision (c) or
(d) of this section.
(c) If the amount actually paid pursuant to the liquidated damages
provision does not exceed 3 percent of the purchase price, the
provision is valid to the extent that payment is actually made unless
the buyer establishes that such the
amount is unreasonable as liquidated damages.
(d) If the amount actually paid pursuant to the liquidated damages
provision exceeds 3 percent of the purchase price, the provision is
invalid unless the party seeking to uphold the provision establishes
that the amount actually paid is reasonable as liquidated damages.
(e) For the purposes of subdivisions (c) and (d), the
reasonableness of an amount actually paid as liquidated damages shall
be determined by taking into account both of the following:
(1) The circumstances existing at the time the contract was made.
(2) The price and other terms and circumstances of any subsequent
sale or contract to sell and purchase the same property if
such the sale or contract is made within six
months of the buyer's default.
(f) Notwithstanding either subdivision (c) or (d), for the initial
sale of a newly constructed condominium, as defined pursuant to
Section 783, the amount actually paid pursuant to the liquidated
damages provision is valid to the extent that payment is actually
made unless the buyer establishes that the amount is unreasonable.
SEC. 4. Section 66427 of the Government Code is amended to read:
66427. (a) A map of a condominium project, a community apartment
project, or of the conversion of five or more existing dwelling units
to a stock cooperative project need not show the buildings or the
manner in which the buildings or the airspace above the property
shown on the map are to be divided, nor shall the governing body have
the right to refuse approval of a parcel, tentative, or final map of
the project on account of the design or the location of buildings on
the property shown on the map that are not violative of local
ordinances or on account of the manner in which airspace is to be
divided in conveying the condominium.
(b) A map need not include a condominium plan or plans, as defined
in subdivision (e) of Section 1351 of the Civil Code, and the
governing body may not refuse approval of a parcel, tentative, or
final map of the project on account of the absence of a condominium
plan.
(c) Fees and lot design requirements shall be computed and imposed
with respect to those maps on the basis of parcels or lots of the
surface of the land shown thereon as included in the project.
(d) Nothing herein shall be deemed to limit the power of the
legislative body to regulate the design or location of buildings in a
project by or pursuant to local ordinances.
(e) If the governing body has approved a parcel map or final map
for the establishment of condominiums on property pursuant to the
requirements of this division, the separation of a three-dimensional
portion or portions of the property from the remainder of the
property or the division of that three-dimensional portion or
portions into condominiums shall not constitute a further subdivision
as defined in Section 66424, provided each of the following
conditions has been satisfied:
(1) The total number of condominiums established is not increased
above the number authorized by the local agency in approving the
parcel map or final map.
(2) A perpetual estate or an estate for years in the remainder of
the property is held by the condominium owners in undivided interests
in common, or by an association as defined in subdivision (a) of
Section 1351 of the Civil Code, and the duration of the estate in the
remainder of the property is the same as the duration of the estate
in the condominiums.
(3) The three-dimensional portion or portions of property are
described on a condominium plan or plans, as defined in subdivision
(e) of Section 1351 of the Civil Code.
SEC. 5. Section 66452.4 of the Government Code is amended to read:
66452.4. (a) If no action is taken upon a tentative map by an
advisory agency that is authorized by local ordinance to approve,
conditionally approve, or disapprove the tentative map or by the
legislative body within the time limits specified in this chapter or
any authorized extension thereof, the tentative map as filed, shall
be deemed to be approved, insofar as it complies with other
applicable requirements of this division and any local ordinances,
and it shall be the duty of the clerk of the legislative body to
certify or state his or her approval.
(b) Once a tentative map is deemed approved pursuant to
subdivision (a), a subdivider shall be entitled, upon request of the
local agency or the legislative body, to receive a written
certification of approval.
SEC. 6. No reimbursement is required by this act pursuant to
Section 6 of Article XIII B of the California Constitution because a
local agency or school district has the authority to levy service
charges, fees, or assessments sufficient to pay for the program or
level of service mandated by this act, within the meaning of Section
17556 of the Government Code.