California real estate disclosure laws California Real Estate Disclosures | Page 67

SECTION IV
DISCLOSURES RELATIVE TO NEW RESIDENTIAL SUBDIVISIONS
Under the Subdivided Lands Law, a subdivision exists when improved or
unimproved land is divided for the purpose of sale, lease or financing
(whether immediate or future) into five or more parcels. The law applies to
residential single-lot subdivisions, common interest developments, timeshares (of 12 or more interests), and mandatory leases of five or more years
in a mobilehome park. Among other exemptions, this law does not apply to:
certain industrial and commercial subdivisions, standard in-city
subdivisions wherein each lot, parcel or unit will be sold with a completed
residential structure, and subdivisions located entirely outside of California
(except a time-share subdivision with one or more component sites located
within the United States).

A. Public Report: Disclosure of Material Facts about a
Subdivision
Unless the project is exempt by operation of law, a person intending to offer
subdivided lands for sale or lease, if that is the marketing plan, must apply
for and obtain a public report from the Department of Real Estate. The
public report discloses to prospective buyers pertinent facts about a
subdivision. The report may include information about utilities and water,
roads, soil and geologic conditions, title, zoning and use, hazards, and any
financial arrangements for completion of the subdivision.
In the case of a common interest development, information is also provi ded
about the homeowners association, the assessments, budget including
estimated reserves, and the governing documents. For further information
regarding common interest developments, please refer to booklets which are
published by the Department of Real Estate available at www.dre.ca.gov
entitled:
•

“Living in a California Common Interest Development;”

•

“Operating Cost Manual for Homeowners Associations;” and

•

“Reserve Study Guidelines for Homeowner Association Budgets.”

A subdivider or his/her broker(s)/agent(s) must post a copy of the public
report in a conspicuous place in any office where sales of subdivision
interests are conducted and must give a copy to any member of the public
who asks for one and to each prospective buyer prior to entering into a
contract to purchase. The subdivider, owner, or the broker(s)/agent(s) of the
subdivider or owner must have each prospective buyer sign a receipt that he
or she has received and has had an opportunity to read the public report

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