[Code of Federal Regulations]
[Title 24, Volume 5]
[Revised as of January 1, 2007]
From the U.S. Government Printing Office via GPO Access
[CITE: 24CFR1710.212]

[Page 53-56]
 
                 TITLE 24--HOUSING AND URBAN DEVELOPMENT
 
 CHAPTER X--OFFICE OF ASSISTANT SECRETARY FOR HOUSING--FEDERAL HOUSING 
 COMMISSIONER, DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT (INTERSTATE 
                    LAND SALES REGISTRATION PROGRAM)
 
PART 1710_LAND REGISTRATION--Table of Contents
 
                    Subpart B_Reporting Requirements
 
Sec.  1710.212  Financial information.

    (a) Financing of improvements. Describe the financing plan that is 
to be used in financing on-site or off-site improvements proposed in the 
Statement of Record.
    (b) Complete the following format:
    (1) Estimated date for full completion of amenities
    (2) Projected date for complete sell out of subdivision

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    (3) Cost and expense recap for lots included in this Statement of 
Record:

(If the subdivision or common promotional plan contains, or will 
contain, 1000 or more lots, furnish this information in its entirety. If 
the subdivision or common promotional plan contains, or will contain, 
less than 1,000 lots, only paragraphs (b)(3) (iii) and (iv) need be 
completed.)
    (i) Land acquisition cost or current fair market value of land.
    (ii) Development and improvement costs (include the estimated cost 
of such items as roads, utilities, and amenities which the developer 
will incur).
    (iii) Estimated marketing and advertising costs.
    (iv) Estimated sales commission.
    (v) Interest (include cost in financing the land purchase, 
improvements, or other borrowings).
    (vi) Estimated other expenses (include general costs, administrative 
costs, profit, etc.).
    (vii) Total.
    (4) Total land sales revenue:
    (i) Estimated total land sales income.
    (ii) Estimated other income.
    (iii) Total income.
    (c) Financial statements. (1) Submit a copy of the developer's 
financial statements for the last full fiscal year. These statements 
shall be prepared in accordance with generally accepted accounting 
principles as prescribed by the Financial Accounting Standards Board and 
generally accepted auditing standards as prescribed by the American 
Institute of Certified Public Accountants, and shall be audited by an 
independent licensed public accountant. They shall include a balance 
sheet, a statement of profit and loss, a statement of changes in 
financial condition and a certified opinion by the accountant. The 
statements shall be no more than six months old on the date the 
Statement of Record is submitted.
    (2) If the audited statements are more than six months old at the 
date of submission of the Statement of Record, or if the last full 
fiscal year has ended within the last 90 days and audited Statements are 
not yet available, the developer may submit a copy of the audited 
statements for the previous full fiscal year and supplement them with 
unaudited, interim statements so that the financial information is no 
more than six months old on the date that the Statement of Record is 
submitted. The interim statements may be prepared by company personnel 
but must contain a balance sheet, a statement of profit and loss and a 
statement of changes in financial condition and be prepared in 
accordance with generally accepted accounting principles.
    (d) Annual report. (1) Each year after the initial effective date, 
the developer shall submit a copy of its latest financial statements. 
These statements must meet the standards set out in Sec.  
1710.212(c)(1), unless the developer has qualified for an exception 
under Sec.  1710.212(e), and must be submitted within 120 days after the 
close of the developer's fiscal year.
    (2) If a developer has submitted its latest statements with a 
consolidated filing since the close of its fiscal year and prior to the 
end of the 120 day period, a second submission of the statements to 
comply with this section is not necessary.
    (3) If the developer no longer has an active sales program on the 
date this report is due, the information set forth in Sec.  
1710.310(c)(7)(iii) may be furnished in lieu of this report.
    (e) Exceptions. (1) If the developer does not have audited financial 
statements and the criteria in one of the following exceptions are met, 
statements need not be audited and certified but must meet all of the 
other requirements set forth in paragraphs (c)(1) and (2) of this 
section.
    (2) The term ``conveys title free of any mortgage or lien'' in these 
exceptions is not intended to prohibit the taking of an instrument as 
security for the lot purchase price after title is conveyed. For the 
purposes of these exceptions, these definitions shall apply:
    (i) ``Deed'' shall mean a warranty deed, or its equivalent, which 
conveys title free and clear of liens and encumbrances.
    (ii) ``Assurance of Title Agreement'' shall mean a legal arrangement 
whereby the purchaser is guaranteed a deed upon payment of no more than 
the full purchase price of the lot (e.g. subdivision trust). In addition 
to a copy of any

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Assurance of Title Agreement, the Secretary may require additional 
documentation such as an attorney's opinion letter to assure that the 
purchaser's title is fully protected.
    (iii) ``Date of contract'' shall mean the date on which the contract 
or agreement is signed by the purchaser.
    (iv) ``Escrow or trust account as to down payments and deposits'' 
shall mean an account, established in accordance with local real estate 
laws or regulations, which assures the return to the purchaser of any 
monies paid in the event title is not delivered to the purchaser in 
accordance with the terms of the contract.
    (3) The exceptions are:
    (i) The aggregate sales price of all lots offered pursuant to a 
common promotional plan equals $500,000.00 or less; or
    (ii) Each of the following conditions of paragraphs (e)(3)(ii)(A) 
and (B) are met, plus the conditions of one of paragraphs (e)(3)(ii)(C), 
(D), or (E):
    (A) Downpayments and deposits are held in an escrow or trust 
account.
    (B) The contract provides for delivery of a deed which conveys title 
free of any mortgage or lien within 180 days of the signing of the 
contract. (In lieu of delivery of a deed, the developer may submit to 
OILSR an Assurance of Title Agreement.)
    (C) The aggregate sales prices of all lots offered pursuant to a 
common promotional plan is at least $500,000 but less than $1,500,000.
    (D) All facilities, utilities and amenities proposed by the 
developer in the Property Report or sales contract have been completed 
so that the lots in the Statement of Record are immediately usable for 
the purpose for which they are sold.
    (E) (1) The developer is contractually obligated to the purchaser to 
complete all facilities, utilities and amenities proposed by the 
developer in the Property Report and sales contract so that all lots 
included in the Statement of Record will be usable for the purpose for 
which they are sold by the dates set out in the Property Report, and;
    (2) The developer has made financial arrangements, such as the 
posting of surety bonds (corporate bonds or individual notes or bonds 
are not acceptable), irrevocable letters of credit or the establishment 
of escrow or trust accounts, which assure completion of all facilities, 
utilities and amenities proposed by the developer in the Property Report 
or contract.
    (f) Newly-formed entity. If the developer is newly formed or has not 
had any significant operating experience, an audited or unaudited 
balance sheet and statements of receipts and disbursements of funds may 
be submitted.
    (g) Use of parent company statements. If the developer is a 
subsidiary company and does not have audited financial statements, the 
Secretary may permit the use of the audited and certified statements of 
the parent company: Provided, That those statements are accompanied by 
an unconditional guaranty that the parent shall perform and fulfill the 
obligations of the subsidiary. If this procedure is adopted, the 
developer shall submit the following:
    (1) The audited and certified financial statements of the parent 
company, together with interim statements if necessary, which comply 
with Sec.  1710.212(c).
    (2) A properly executed guaranty in a form acceptable to the 
Secretary.

The disclosure information required in Sec.  1710.112 shall be 
appropriately amended to reference the parent company and not the 
developer and must include a statement to the effect that the 
developer's parent company (insert name) has entered into an 
unconditional guaranty to perform and fulfill the obligations of the 
developer.
    (h) Opinions. If the accountant qualifies or disclaims his opinion, 
the Secretary may accept the statements and require such additional 
disclosure as the Secretary deems necessary in the public interest or 
for the protection of purchasers.
    (i) Copies for prospective purchasers. Copies of the financial 
statements filed with the Statement of Record shall be made available to 
prospective purchasers upon request. A supply of the latest submitted 
statements shall be maintained at whatever place, or places, as is 
necessary to allow immediate delivery upon request by a prospective 
purchaser. These statements shall contain financial information

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only and shall not include any promotional material such as that usually 
set forth in annual reports.
    (j) Change from audited to unaudited statements. (1) Developers who 
file audited statements must continue with audited statements throughout 
the duration of the registration unless, at a later date, the developer 
submits amendments which demonstrate to the satisfaction of the 
Secretary that it then qualifies for an exception from audited 
statements under paragraph (e)(3)(ii) of this section. For purposes of 
paragraph (e)(3)(ii)(C) of this section, the Secretary will consider the 
aggregate sales prices of only the lots yet to be sold, and may consider 
whether any additions to the subdivisions or reacquisitions of lots 
already sold would be likely to cause the dollar limits to be exceeded.
    (i) The aggregate sales prices of the lots yet to be sold in the 
subdivision has been reduced to less than $1,500,000.00, and that it 
will not exceed this amount through further additions to the subdivison, 
or through the reacquisition of lots already sold, and;
    (ii) The sales contract provides for delivery of a deed within 120 
days of the date of the contract which conveys title free and clear of 
any mortgage or lien or the developer files an Assurance of Title 
Agreement with OILSR, and;
    (iii) Any down payments or deposits are held in an escrow or trust 
account, or;
    (iv) The developer then qualifies for exception (e)(3)(iii) or 
(e)(3)(iv) above.
    (2) The Secretary may allow a developer, who has made sales prior to 
registration, to submit unaudited statements under the provisions of 
paragraph (j)(1)(i) of this section. The developer must demonstrate to 
the satisfaction of the Secretary that the acceptance of unaudited 
statements would not be a detriment to the public interest or to the 
protection of purchasers.

[44 FR 21453, Apr. 10, 1979, as amended at 45 FR 40490, June 13, 1980; 
49 FR 31372, Aug. 6, 1984; 50 FR 10942, Mar. 19, 1985]