HOUSE BILL REPORT

HB 1656

As Amended by the Senate

BYRepresentative Crane

Changing land development regulations.

House Committe on Judiciary

Majority Report:  Do pass.  (18)

      Signed by Representatives Appelwick, Chair; Crane, Vice Chair; Padden, Ranking Republican Member; Belcher, Brough, Dellwo, Hargrove, Inslee, Locke, R. Meyers, Moyer, H. Myers, Patrick, Schmidt, Scott, D. Sommers, Tate and Wineberry.

House Staff:Bill Perry (786-7123)

AS PASSED HOUSE MARCH 8, 1989

BACKGROUND:

In 1973, the legislature enacted the Land Development Act.  This act applies to the public sale of 10 or more parcels of "developed land."  The act has two main provisions.  First, it requires the seller of such land to register with the Department of Licensing before offering the land for sale.  Second, it allows a purchaser of such land to void the sale if the seller did not give the purchaser a proper public offering disclosure statement prior to the sale.

A number of exemptions are provided from the act for various kinds of land.  The act does not cover: parcels of five acres or more; parcels on which there is a residential, commercial or industrial building (or an obligation to construct such a building within two years of the sale); purchases by real estate developers or brokers; cemetery lots; indebtedness secured by a mortgage or deed of trust; regulated securities transactions; regulated real estate investment trust transactions; or regulated interests in oil, gas, or minerals.

Before offering land for sale, a developer must file a registration application with the department.  The application must describe the development, disclose ownership interests, indicate other states in which similar applications have been made, indicate availability of utilities, provide land title information, describe any hazards on the property, include the public offering statement and a description of the planned promotion for the sale of the property, and any other information the department determines will help protect purchasers.

A public offering statement must include certain information for the benefit of prospective purchasers. That information includes a general description of the property, its intended uses, a list of utilities, improvements, and facilities that are or will be available, a disclosure of any hazards, and such other information as the department determines will assure full and fair disclosure to prospective purchasers.

The department is to investigate applicants for their ability to convey the offered property, their compliance with health, planning, and subdivision requirements of state and local law, the fairness of their advertising material, and their possible prior convictions for land development or sales crimes.

The department may suspend public offerings if it determines them to be misleading, and may examine a developer's records at any time. The department may also issue temporary cease and desist orders or revoke a registration, and may seek injunctive relief in superior court.

Violations of the Land Development Act are also violations of the Consumer Protection Act.

SUMMARY:

The Land Development Act is amended to remove all Department of Licensing regulation of selling land covered by the act.

Amendments are also made to portions of the act dealing with the obligations of sellers to disclose information to buyers.

The exemption in the act for developments in which each parcel is five acres or more is removed, as is the exemption for developments on which buildings are to be constructed within two years of sale.

Additional information is required in the public offering statement that is to be made available to prospective buyers.  The statement must indicate whether the developer has complied with all local health and planning requirements.  It must also disclose all material terms and conditions of any common improvement or facility in which the developer will have an interest.

Individual purchasers are given authority to sue for damages or injunctive relief for violations of the act.  Courts are given discretion to award attorneys' fees in such cases.

EFFECT OF SENATE AMENDMENTS:   The original provisions of the bill are stricken and certain provisions of the Condominium Act (SB 5208) that the Governor vetoed are inserted with some modifications.  The provisions relate to article 4, which governs consumer protection issues.

Section 1 of the striking amendment is section 4-105 of the Condominium act with modifications.  The Condominium Act requires the filing of an extensive public offering statement.  The Act requires a declarant to file a public offering statement in compliance with the Act's provisions except when the declarant has filed a public offering statement (or disclosure document) under the securities act, the land development act, the timeshare act, or state law on camping resorts.  The striking amendment removes all the exceptions to the filing of the public offering statement under the Condominium Act except for the exception that the declarant has filed a public offering statement under the securities act.

Section 2 of the striking amendment is section 4-111 of the Condominium Act with a technical correction of a typographical error that caused some confusion regarding the express warranties provisions.  Otherwise the section is reinserted.

Section 3 of the striking amendment is 4-114 of the Condominium Act and is inserted in the striking amendment without change. The section governs the statute of limitations which is a four year statute of limitations after the cause of action accrues.

Section 4 of the striking amendment is 4-118 of the Condominium Act and is inserted without change.  The section states that a contract for sale can be negotiated but no interest conveyed until the declaration is recorded.

Section 5 of the striking amendment is 4-121 of the Condominium Act and is reinserted with modifications.  The section creates a statutory committee to review the Condominium Act.  The membership is modified to include two designees of the governor.

Fiscal Note:      Requested February 22, 1989.

House Committee ‑ Testified For:    Ron Weaver, Department of Licensing.

House Committee - Testified Against:      None Presented.

House Committee - Testimony For:    The abusive sales practices that gave rise to Department regulation are no longer prevalent.  Many of the regulatory features of the current law are unnecessary because of local or federal regulation.  The bill will save the department money by eliminating a great deal of paperwork.  Only two enforcement actions were taken under the act last year.

House Committee - Testimony Against:      None Presented.