Suggestions for Subdividers

Common errors to avoid when submitting public report applications

1. Carelessness in completing the questionnaire. Respond to all questions. Insert "N/A" (Not Applicable) when appropriate. Provide complete narrative answers when applicable. Pay attention to the responses given in subsequent phase applications as they may differ from that provided in the master file. All documents to be signed by the subdivider as indicated on the form or by the subdivider's authorized agent. Revised or corrected responses in the application should be signed or initialed by the subdivider, or the subdivider's authorized agent.


2. Failure to provide the street address of the escrow depository on the Reservation Instrument (RE 612) and Reservation Deposit Handling Agreement (RE 612A) submitted for a preliminary public report.


3. Submitting "old" preliminary title reports. A preliminary report should be no more than 90 days old from the date the application is filed.


4. Omitting evidence of future vesting when the subdivider does not have title to the property at the time of filing an application. The evidence of future vesting must include a date certain for acquiring title.


5. Documents are not completed in sample form. The deposit receipt/purchase contract frequently does not correctly set forth a liquidation damages clause which complies with Regulation 2791 . Sample language to conform with this regulation can be found in the Subdivision Public Report Application Guide (SPRAG) . Also, the sample grant deed is often submitted without the proper certification and without showing reservations of record (e.g., mineral, oil and gas). Sample language to conform to these requirements can be found in the SPRAG.


6. Inconsistency between the questionnaire and exhibits. Discrepancies between the questionnaire, CC&Rs and condominium plan are common, especially with respect to the number of units and parking spaces, and identification of restricted or exclusive use areas, if any. All the documents submitted with the application for a public report must agree concerning the method in which the subdivider will comply with the law; e.g., Business and Professions Code Section 11018.5(a)(2) or Regulation 2792.9 . Common area completion dates should be consistent between the questionnaire, Planned Construction Statement (RE 611A) and Escrow Instructions (RE 621) (if applicable).


7. Failure to submit copies of recorded exceptions contained in the preliminary title report affecting the subdivision, i.e., deed restrictions, deferred development agreements, prior CC&Rs.


8. Omitting information as to hazards in or near the subdivision. Carefully question the subdivider/applicant in regard to this item when filling out the questionnaire. Precise information concerning hazards obtained as part of the original filing lessens the likelihood for a follow-up deficiency.


9. Failure to specify in escrow instructions the method in which the subdivider intends to comply with Business and Professions Code Section 11018.5(a)(2) pertaining to completion arrangements for common area and common facilities. The instructions must be specific and may not simply list the various alternatives that could be selected by the subdivider. Sample language for the various alternate arrangements can be found in SPRAG . Also, a provision for the return of funds to non-defaulting buyers within a reasonable time often is not included in the buyer's escrow instructions. Escrow instructions are submitted without being signed by both the subdivider/applicant and the escrow officer.


10. Failure to include complete information concerning special districts Special District & Special Assessment District (RE 624C) form.


11. Submittal of master management documents which are not redlined, are incomplete or inapplicable for the project.

Typical errors found in Duplicate Budget Packages

1. Discrepancies between the filing documents and the project inventory and/or structure of the association; i.e. facilities, phases, number of lots/units, completion arrangements.


2. Failure to correct deficient items on resubmitted budget(s) or approved items are changed, both without any explanation.


3. Planned Construction Statement (RE 611A) not submitted with the budget when the subdivider plans to post a security device (i.e., bond, letter of credit or set-aside letter) for completion of common areas under Business and Professions Code Section 11018.5(a)(2) . The special provisions for Enforcement of Bonded Obligations as set forth in Regulation 2792.4 must be included in the CC&Rs, even if the subdivider will use the Escrow Services (RE 621) option.


4. Incomplete Planned Construction Statements (RE 611A) . Items to be completed (i.e., residential units) are not listed, descriptions of items to be completed are insufficient, and the number or size of the items are missing.


5. Failure to submit plot or site plans for every phase of the project to be reviewed. Frequently, such plans are not scaled, have no dimensions or are not legible.


6. Incomplete duplicate budget packages for amendment/renewal applications. For example, financial statements, delinquent assessment statements, reserve studies or current budgets are not included.


7. Special maintenance obligations by the Association (i.e., easements) are not disclosed in the duplicate budget package.


8. Assessments are not prorated as required by Regulation 2792.16(b) when the value of common services vary.


9. Reserve amounts do not account for the remaining life of the structure. For example, the roof may be 12 years old but the budget is prepared as if the roof were new. Also, an incorrect remaining life is used to calculate the reserve items; such as, a 15-year roof life when in fact the roof will last only 8 years.


10. Certain common services are not included in the budget, such as water, hot water, exterior maintenance, etc.


11. Miscalculations in the budget, worksheets and summary sheets.

Things you can do to speed up file processing

1. Get expert help. If you are new to the subdivision industry or otherwise don't have an extensive background in the complexities involved in obtaining a public report, it may be very advantageous to use the services of a well-qualified agent to handle your application. Attorneys, consultants and title companies that are experienced in the procedures can help you prepare a more complete and correct application, and may be able to expedite the deficiency correction process. The use of Department pre-approved master management documents prepared by an attorney prevents the time associated with the review of the governing documents (articles of incorporation, bylaws and restrictions) for a common interest subdivision.


2. Review the completed questionnaire and all documents prior to submission. Obvious mistakes could be caught and corrected before file processing begins thereby making the review by the Department smoother. Be sure the correct documents are being used. When proposed documents are "pulled off the shelf" and inserted in the application, there is an excellent chance that they will be unsatisfactory.


3. Respond to deficiency notices quickly and completely. To avoid a delay in receiving your public report, submit deficient items on a timely basis and refrain from submitting documents piecemeal. Your file will not be completely reviewed until all deficient items have been submitted.