SB 1462

Bill Subjects

Abstract

Existing law regulates the sale of subdivided lands and prescribes definitions for this purpose. Existing law defines a subdivision to include, among other things, condominium projects and planned developments, as specified, and other common interest developments. Existing law requires a person who intends to offer subdivided lands for sale or lease to file with the Department of Real Estate an application for a public report, as specified. Existing law prescribes various restrictions on the sale or lease of lots in a subdivision. In certain instances, existing law permits lots to be sold or leased only if the money paid or advanced by a purchaser or lessee is placed into an escrow account or a bond furnished for the purpose of protecting purchasers or lessees. This bill would permit a purchaser's deposit that is held in escrow pursuant to a binding sales contract for a lot or parcel within a subdivision that is not yet constructed or developed to be disbursed before closing to pay for project construction costs, as specified. The bill would permit the disbursement of a purchaser's deposit before closing and the conveyance or leasing of any unit before completion of construction if specified conditions are met, including, among other things, that the developer has submitted to the Department of Real Estate a project budget showing all costs required to be paid in order to complete the project, the department has reviewed and approved the proposed disbursement, and the purchaser provides express informed consent to the disbursement, as specified. If a purchaser's funds are to be disbursed before the completion of construction of the project, the bill would require the developer to submit specified information to the Department of Real Estate, including, among other things, a copy of the purchaser's express informed consent to the disbursement. The bill would permit the disbursement of a purchaser's deposit before closing and the disbursement of moneys from the conveyance or leasing of units before completion of construction to pay any cost set forth in the project budget, as specified. The bill would require a specified notice to be prominently displayed in the developer's public report for the project if a purchaser's deposit is to be disbursed before closing or if moneys from the conveyance or leasing of units before completion of construction are to be disbursed to pay for project costs. The bill would require the Department of Real Estate to complete a review required by these provisions within 30 days of receipt of the document to be reviewed. Existing law provides that 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 constitutes liquidated damages to the seller upon the buyer's failure to complete the purchase of the property is valid if certain conditions are satisfied, including certain conditions pertaining to whether the amount actually paid pursuant to the liquidated damages provision does or does not exceed 3% of the purchase price. This bill would provide that, notwithstanding the provisions described above, the amount actually paid pursuant to a liquidated damages provision may exceed 3% of the purchase price if the bill's provisions described above are satisfied, in which case the bill would require that the liquidated damages equal the amount of the deposit.