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Full Disclosure Act Questions and Answers
Ten Most Commonly Asked Questions from Developers

These questions and answers are meant to apply to general situations and should not be construed as a definitive answer to any questions you may have. For further information, contact the program office directly at the address on the Interstate Land Sales home page.

QUESTION 1 - Does My Offering Come under HUD Jurisdiction?

ANSWER - If you have fewer than 25 lots that are part of a common promotional plan, you are exempt from both the Act's anti-fraud provisions and registration requirements. If your offering has 25-99 lots that are part of a common promotional plan, your offering is exempt from registration, but is subject to the antifraud provisions, unless your offering is exempt under any of the provisions stated in 24 CFR 1710.5. If your offering has 100 or more lots, you may need to register your offering unless it qualifies for one of the available exemptions (24 CFR 1710.5 through 1710.16). Registration requirements can be found at 24 CFR 1710.100 through 1710.219.

QUESTION 2 - What Constitutes a Common Promotional Plan?

ANSWER - A "common promotional plan" means any plan undertaken by a single developer or a group of developers acting together to offer lots for sale or lease. A common promotional plan is presumed to exist if land is offered by a developer or a group of developers acting in concert, and the land is contiguous or is known, designated, or advertised as a common development or common name. While other characteristics are also evaluated in determining whether a common promotional plan exists (i.e. - 10% or greater common ownership interest, common advertising, common sales facilities), each situation is evaluated on its own merit.

QUESTION 3 - Who Is Considered a Developer?

ANSWER - A developer is an individual or a business entity that, directly or indirectly, sells or leases, or offers to sell or lease, or advertises to sell or lease lots in a subdivision. Since offering or selling lots, rather than physically developing them, is a criteria for determining who is a developer, the following examples, in addition to the traditional developer, may meet the criteria: (1) a bank offering lots obtained through a foreclosure; (2) a corporation that acquires groups of lots in an existing subdivision for resale; or (3) an individual who buys lots at a tax sale or an auction for resale to others.

QUESTION 4 - How Long Does It Take to Obtain an Effective Date of Registration?

ANSWER - Each time you submit an initial registration, consolidation or amendment, HUD will examine it within thirty days and inform you whether the submission is effective or whether there are deficiencies.

QUESTION 5 - What Are My Obligations once My Registration Becomes Effective?

ANSWER - You will be required to submit an annual report within thirty days of the anniversary date of your effective date and financial statements each year after the initial effective date. In addition, you are required to file an amendment within fifteen days of the date on which you knew or should have known that there has been a change in material fact.

QUESTION 6 - If My Offering Qualifies for an Exemption, Do I Need to Notify HUD?

ANSWER - All exemptions, with the exception of the multiple site subdivision exemption and the "substantial compliance" exemption, are self-determining and require no notification to HUD. However, if you wish a written opinion, you may request an Advisory Opinion pursuant to 24 CFR 1710.17.

QUESTION 7 - What Does "Substantial Compliance" Mean?

ANSWER - "Substantial compliance" means that an offering entails circumstances that are equal to or better than the technical regulatory requirements, or that are consistent with the basic intent of a particular exemption. Developers must request an Exemption Order so that HUD can determine whether the circumstances justify eligibility for the exemption.

QUESTION 8 - If I Have a Situation where Certain Sales May Fall under the Jurisdiction of the Interstate Land Sales Full Disclosure Act, but the Circumstances Do Not Justify the Need for a Registration, What Should I Do?

ANSWER - You may request a No Action letter from HUD, pursuant to 24 CFR part 1710.18 by describing the particular circumstances as fully as possible. However, the issuance of such a letter does not affect any right or remedy that the purchaser may have under the Act (i.e. - the two year right of rescission).

QUESTION 9 - What Types of Fees Are Required by Your Office?

ANSWER - For registrations and consolidations, the fees are $800 for 200 or fewer lots and $1000 for 201 or more lots. If you have 101 or more unsold lots at the time your Annual Report is due, the fees is $800. If you wish to reactivate your registration after being suspended, the fee is $800 if you have 100 or more unsold lots. The fee for requesting an Advisory Opinion or Exemption Order is $500. The annual fee for the Annual Report required under multiple site subdivision exemption is $100.

QUESTION 10 - If I Comply with My State's Registration Requirements, Do I Still Need to File with HUD?

ANSWER - Yes. In most instances you must still submit a Federal registration if your offering is subject to the Act's jurisdiction. However, there are four states which are certified by HUD: Arizona, California, Florida, and Minnesota. If you have effectively registered with those states, HUD will accept that state's disclosure document in lieu of the standard Federal registration. The fees as stated in Question 9 also apply to these registrations.

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