AN ACT Relating to land development; amending RCW 58.19.010, 58.19.020, 58.19.030, 58.19.050, 58.19.060, 58.19.070, 58.19.080, 58.19.090, 58.19.100, 58.19.110, 58.19.120, 58.19.130, 58.19.150, 58.19.160, 58.19.170, 58.19.180, 58.19.190, 58.19.200, 58.19.210, 58.19.220, 58.19.230, 58.19.260, 58.19.300, and 58.19.940; reenacting and amending RCW 42.17.310; adding new sections to chapter 58.19 RCW; creating a new section; repealing RCW 58.19.040, 58.19.185, 58.19.290, 58.19.900, and 58.19.910; and providing an effective date.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:

Sec. 1. Section 1, chapter 12, Laws of 1973 1st ex. sess. and RCW 58.19.010 are each amended to read as follows:

The legislature finds and declares that the sale and offering for sale of land or of interests in ((~~associations~~)) common-interest communities which provide for the use or occupancy of land touches and affects a great number of the citizens of this state and that full and complete disclosure to prospective purchasers of pertinent information concerning land developments, including ((~~any encumbrances or liens which might attach to the land and the physical characteristics of the development as well as the surrounding land~~)) common-interest communities, is essential. The legislature further finds and declares that a program of state registration and of publication and delivery to prospective purchasers of a complete and accurate public offering statement is necessary in order to adequately protect both the economic and physical welfare of the citizens of this state. It is the purpose of this chapter to provide for a reasonable program of state registration and regulation of the sale and offering for sale of any interest in significant land developments and common-interest communities within or without the state of Washington, so that the prospective purchasers of such interests might be provided with full, complete, and accurate information of all pertinent circumstances affecting their purchase.

Sec. 2. Section 2, chapter 12, Laws of 1973 1st ex. sess. as amended by section 208, chapter 158, Laws of 1979 and RCW 58.19.020 are each amended to read as follows:

When used in this chapter, unless the context otherwise requires:

(1) "Blanket encumbrance" shall mean a trust deed, mortgage, mechanic's lien, or any other lien or encumbrance, securing or evidencing the payment of money and affecting the land to be developed or affecting more than one lot or parcel of developed land, or an agreement affecting more than one such lot or parcel by which the developer holds said development under option, contract, sale, or trust agreement. The term shall not include taxes and assessments levied by a public authority.

(2) "Director" means the director of licensing or his authorized designee.

(3) "Developer" means any owner of a development who offers it for disposition, or the ((~~principal~~)) designated agent of an ((~~inactive~~)) owner.

(4) "Development" or "developed lands" means land which is ((~~divided or is proposed to be divided for the purpose of disposition~~)) or will be disposed into ten or more lots, parcels, interests, or units ((~~(excluding interests in camping clubs regulated under chapter 19.105 RCW)~~)) and any other land whether contiguous or not, if ten or more lots, parcels, units, or interests are offered as a part of a common ((~~promotional~~)) plan of developing or advertising and sale.

(5) "Disposition" includes any sale, lease, assignment, or exchange of any interest in any real property which is a part of or included within a development, and also includes the offering of property as a prize or gift when a monetary charge or consideration for whatever purpose is required in conjunction therewith, and any other transaction concerning a development if undertaken for gain or profit.

(6) "Offer" includes every inducement, solicitation, or media advertisement ((~~which has as a principal aim to encourage~~)) encouraging a person to acquire an interest in land.

(7) "Hazard" means all existing or proposed unusual conditions relating to the ((~~location of the~~)) development, such as noise, safety, or ((~~other nuisance~~)) a condition or event which adversely affects or might adversely affect the development or the interests of purchasers.

(8) "Person" means an individual, corporation, government or governmental subdivision or agency, business trust, estate, trust, partnership, unincorporated association, two or more of any of the foregoing having a joint or common interest, or any other legal or commercial entity.

(9) "Purchaser" means a person who acquires or attempts to acquire or succeeds to any interest in land.

(10) "Residential buildings" shall mean premises that are actually intended or used as ((~~permanent~~)) the primary residences of the purchasers ((~~and that are not devoted exclusively to any other purpose~~)).

(11) "Common-interest community" means real estate, land, or a land development with respect to which a person by virtue of his or her ownership interest in a unit or other interest therein: (a) Is entitled to exclusive use of a portion of the property, (b) has a concomitant membership or undivided interest in an association responsible for ownership and management of certain portions of the property which is commonly owned, and (c) is obligated to pay common expenses allocated to each owner/ member. Not exclusive of others, such common-interest communities include projects structured as or involving condominiums, real estate cooperatives, and owners associations.

(12) "Commercial promotional programs" means packaging or organizing for purposes of soliciting prospective purchasers to purchase a product or commodity, advertising and promotional materials that involve promises to the prospects, of gifts, prizes, awards or other items of value.

(13) "Department" means the department of licensing.

Sec. 3. Section 3, chapter 12, Laws of 1973 1st ex. sess. as amended by section 209, chapter 158, Laws of 1979 and RCW 58.19.030 are each amended to read as follows:

(1) Unless the method of disposition is adopted for the purpose of evasion of this chapter, ((~~the~~)) offerings of lots, units, or interests in developments are exempt from the registration provisions of this chapter ((~~shall not apply to land and offers or dispositions~~)) under the following circumstances:

(a) ((~~By a purchaser of developed lands for his~~)) An entire land development is purchased for the purchaser's own account in a single or isolated transaction;

(b) ((~~If fewer than ten separate lots, parcels, units, or interests in developed lands are offered by a person in a period of twelve months;~~

~~(c) If each lot offered in the development is five acres or more;~~

(d) On which there is a residential, commercial, or industrial building, or as to which there is a legal obligation on the part of the seller to construct such a building within two years from date of disposition)) For a lot or parcel platted under chapter 58.17 RCW on which there is built or substantially built a residential, commercial, or industrial building, not a condominium or a common-interest community and the lot or parcel is not involved with a significant common-interest community;

((~~(e)~~)) (c) The disposition is to any person licensed as a contractor by the state who acquires ((~~such~~)) a lot((,)) or parcel((~~, unit or interest therein~~)) for the purpose of ((~~engaging in the business of~~)) constructing thereon a residential, commercial, or industrial building((~~s or for the purpose of resale or lease or other disposition of such lots to persons engaged in such business or businesses~~)) platted under chapter 58.17 RCW and not a common-interest community, or involved with a significant common-interest community;

((~~(f) Any~~)) (d) The subdivision lot((,)) or parcel((~~, unit or interest if~~)) is not a condominium or other form of a common-interest community, and the development is located within an area incorporated under Title 35 RCW prior to January 1, 1974;

((~~(g)~~)) (e) The disposition is pursuant to court order; ((or

~~(h) As~~)) (f) The disposition is of cemetery lots or interests; or

(g) The disposition is of lots or parcels in land developments, containing any number of lots that are not a common-interest community, or involved with such a community, that is a subdivision or short-plat subdivision, as defined in RCW 58.17.020. The exemption applies only if:

(i) The lots or parcels have met all local subdivision, environmental, health, and zoning requirements;

(ii) A notice of intent to sell, as required in section 3 of this 1987 act, has been filed with the director;

(iii) The local planning commission, or other local regulatory agency designated by the local executive body, certifies to the director, on a form provided by the department, that the developer has complied with all local ordinances, rules, regulations, permits, and zoning requirements, and there is no local regulatory objection to the granting of an exemption from registration by the department;

(iv) An affidavit is filed by the developer with the department that the blanket encumbrance protections and assurances to protect titles, required under RCW 58.19.180 and elsewhere in this chapter, have been or will be complied with; and

(v) The necessary filing fees have been received.

(2) For developments located outside the state but within the United States, consisting of any number of lots or parcels, not a common-interest community, or involved with such a community, the department may grant an exemption from the registration provisions of this chapter if the following conditions are met:

(a) The necessary filing fees have been received;

(b) The developer provides adequate assurance that all local, state, and federal subdivision, environmental, health, zoning, and permit requirements have been met;

(c) The development in already registered with a regulatory body in the state in which the property is located, under a state subdivision or land sales statute or is currently registered with the federal office of interstate land sales;

(d) The blanket encumbrance requirements of RCW 58.19.180 are met to the satisfaction of the department;

(e) An escrow is in place for deposit of purchaser funds until such time as purchasers in this state have had a reasonable period of time to inspect the properties to their satisfaction;

(f) Advertising and promotional materials have been submitted to the department and been found acceptable;

(g) All amenities or facilities that are promised or required are in place, bonded, or otherwise assured; and

(h) By order, the department agrees to the exemption.

(3) Whether or not qualifying for an exemption under subsection (1)(g) of this section developments are exempt from the registration requirements of this chapter and from the requirements for submitting advertising and reports of sales to the department, if they contain twenty-five or fewer lots or parcels, under the following conditions:

(a) The development has been platted under chapter 58.17 RCW and local subdivision ordinances;

(b) There is no involvement with a common-interest community;

(d) The developer has filed an affidavit certifying that:

(i) All promised or required amenities are in place, bonded, or otherwise assured; and

(ii) The blanket encumbrance requirements of the statute have been satisfied;

(e) The necessary fee has been received by the department.

(4) The director may by rule or order grant waivers from registration for common-interest communities upon determining that registration is not necessary for the public health, safety, and welfare. In granting the waivers, the department shall consider the following as criteria:

(a) The total number of members in the community;

(b) The nature and value of the properties involved;

(d) The complexity of the structuring and the documentation establishing the project; and

(e) The registration status of any associated offering of lots or land parcels.

(5) The director may, by rule, order, or condition to the issuance of a permit to market, grant, wholly or in part, exemptions from registration or may abbreviate registrations or the written disclosures for developments of any description covered under this chapter under circumstances in which it appears doing so is in the public interest.

(6) Unless the method of disposition is adopted for the purpose of evasion of this chapter, the provisions of this chapter shall not apply to:

(a) Offers or dispositions of evidence of indebtedness secured by a mortgage or deed of trust of real estate;

(b) Offers or dispositions of securities or units of interest issued by a real estate investment trust regulated under any state or federal statute;

~~(d)~~)) Offers or dispositions of securities currently registered with the business and professions administration in the department of licensing;

((~~(e)~~)) (d) Offers or dispositions of any interest in oil, gas, or other minerals or any royalty interest therein if the offers or dispositions of such interests are regulated as securities by the United States or by the business and professions administration in the department of licensing.

(7) No exemptions or waivers under this chapter are valid, or may be considered by the department, until the filing and other fees required by section 32 of this 1987 act have been received by the department.

NEW SECTION. Sec. 4. (1) It is unlawful and a violation of this chapter, regardless of the registration status of the development, for any developer of ten or more lots, units, parcels, or interests covered under this chapter and sited within this state, to fail to provide the department of licensing a notice of intent to sell, prior to the time of offering or disposing of the lots, units, parcels, or interests.

(2) The notice must be provided in writing by certified mail to the department on a form prepared by the department or otherwise, but at a minimum the notice shall contain, along with the required filing fee, the following information:

(a) The trade or plat name of the development and the business and residence address of the developer;

(b) The location, type of project, and number of units or interests in the development;

(d) The identity of all sales agents if known; and

(e) Any other information required by the director for the purpose of determining the registration status of the development.

(3) Wilful and intentional failure to provide the department with a notice of intent to sell shall, among other penalties and not exclusive of civil remedies available or provided for in this chapter, be cause for the department to deny any application for registration or renewal or claim to an exemption or waiver.

NEW SECTION. Sec. 5. (1) The director may grant permits for limited or conditional advertising or marketing of an offering of lots, units, or interests and temporarily waive or delay a full and final registration if:

(a) Agreements between the developer and a purchaser are in the nature of options and not binding on purchasers until a full registration is completed and the final version of the written disclosures are available for purchasers;

(b) All down payments are placed in an escrow acceptable to the department and are refundable upon demand anytime until a final acceptance subsequent to the full registration;

(d) The required filing fees have been received by the department.

(2) Under circumstances in which state or federally regulated lending institutions or federal home loan programs are involved, the department may issue preliminary marketing permits and may allow down payments resulting from premarketing commitments required by such institutions as a condition to financing, to be placed in escrows where the funds will be committed to the transaction as a condition to the issuance of such permits. If such permits are to be allowed, the department shall by rule prescribe procedures and requirements to assure competent written disclosures and implementation of purchaser protections required under RCW 58.19.080, 58.19.180, and section -- of this act.

(3) The director may grant other temporary, limited, or conditional permits to developers or other persons to advertise for or identify prospective purchasers without any application to register an offering of lots, units, or interests under the following circumstances:

(a) Advertising and solicitations are limited and in the nature of a premarketing survey or a feasibility study;

(b) No funds of any description are solicited or received from prospective purchasers;

(d) The necessary filing fees have been received by the department.

Sec. 6. Section 5, chapter 12, Laws of 1973 1st ex. sess. and RCW 58.19.050 are each amended to read as follows:

Unless the registration of the development or the transaction is exempt ((by)) or waived by the department under RCW 58.19.030 or the development or transaction has been granted a permit by the department to engage in limited preconstruction or preregistration activity under section 5 of this 1987 act:

(1) No person may offer or dispose of any interest in a development located in this state, nor offer or dispose of in this state any interest in a development located without this state prior to the time the development is registered in accordance with this chapter((.));

(2) Any contract or agreement for the purchase of an interest in a development, where the current full and complete public offering statement has not been given to the purchaser in advance or at the time of his signing, shall be voidable at the option of the purchaser until five business days after the purchaser receives the public offering statement. A purchaser may revoke such contract or agreement ((~~within forty-eight hours, where he~~)) until five business days after the purchaser has received the public offering statement ((~~less than forty-eight hours before he signed the contract or agreement~~)), and the contract or agreement shall so provide in a location clearly noticeable to the purchaser. Notice of revocation shall be made by written notice delivered to the seller or his agent. The time period of ((~~forty-eight hours~~)) five business days shall not include all or any portion of a Saturday, Sunday, the day of purchase, or legal holiday;

(3) If units or interests in a registered development are proposed to be sold by public auction, the department may by rule provide for exceptions to this section so as to permit disposition by auction while providing purchasers written disclosure and the maximum protection allowable within the framework and custom of licensed auctioneering.

Sec. 7. Section 6, chapter 12, Laws of 1973 1st ex. sess. and RCW 58.19.060 are each amended to read as follows:

Unless exempted by RCW 58.19.030, by rule or order of the director, or by section 5 or 6(3) of this 1987 act, an application for registration of a development shall be filed as prescribed by rules and regulations adopted by the director and shall contain the following documents and information, and any additional information for the protection of the public health, safety, and welfare:

(1) An irrevocable appointment of the director to receive service of any lawful process in any noncriminal proceeding arising under this chapter against the applicant, registrant, or ((~~his~~)) their personal representatives;

(2) A legal description of the development offered for registration, together with ((a)) maps, plans, and surveys showing the division proposed or made, and the dimensions of the lots, parcels, units, or interests, and the relation of the development to existing streets, roads, and other off-site improvements;

(3) The states or jurisdictions in which an application for registration or similar document has been filed, and any adverse order, judgment, or decree entered in connection with the development by the regulator authorities in each jurisdiction or by any court;

(4) The name and address of each person having an ownership interest of ((~~five~~)) ten percent or more in the development or the developer and developer's affiliates, together with the names, principal occupations, and addresses of every officer, director, partner, or trustee of the developer and, if the developer is other than a natural person, each natural person holding a ten percent or greater interest in the developer or its affiliates;

(5) A statement of the existing provisions for access, sewage disposal, potable water, and other public utilities in the development; a statement of the improvements and building units to be ((~~installed~~)) completed, how they are going to be financed, the schedule for their completion; and a statement as to the provision for improvement and operations maintenance. The statements required in this subsection shall include certificates from the appropriate governmental authorities certifying that the applicant has complied with all building permits and all local health and planning, zoning, and state and local subdivision, condominium, and common-interest community requirements;

(6) A statement, in a form acceptable to the director, of the condition of the title to the development including easements of record, encumbrances, liens of record, blanket encumbrances, and the existence of nondisturbance agreements, subordination clauses, and partial release clauses, if any, ((~~as of a specified date~~)) a condition of title dated to within twenty days of the date of application, by ((~~title opinion of~~)) a title insurance company or licensed attorney, not a salaried employee, officer, or director of the applicant or owner, or by other evidence of title acceptable to the agency;

(7) Copies of the instruments which will be delivered to a purchaser to evidence his interest in the development and of the contracts and other agreements which a purchaser will be required to agree to or sign;

(8) ((A statement, where the development is encumbered by a blanket encumbrance which does not contain an unconditional release clause, as to which alternative condition provided for in RCW 58.19.180 the developer shall adopt;

~~(9)~~)) Copies of instruments such as declarations, covenants, bylaws, and those creating easements, restrictions, or other encumbrances affecting the development;

((~~(10)~~)) (9) A statement of the zoning and other governmental regulations affecting the use of the development and also of any existing or proposed special taxes or assessments which affect the development;

(10) If involving a common-interest community:

(a) The proposed budget(s) covering operations of the common-interest community for the next two years of operations and, if appropriate to the situation, copies of statutory or declaration-required audits covering the past three years, or if there are no audits, statements provided by the treasurer of the common-interest community or independent accountant, showing income and cash disbursements for the prior three years;

(b) A statement covering the location of all common-interest community accounts and properties, the purpose and amounts in the accounts, and the signature for release of funds from depositories; and

(c) Minutes of membership and board meetings of the common-interest community covering the three years prior to application, or as the department may by rule require;

(11) A narrative description of the promotional plan for the disposition of the development, together with copies of all advertising material which has been prepared for public distribution by any means of communication;

(12) A statement of any hazard on or around the development;

(13) The proposed public offering statement;

(14) Any other information, including any ((~~current~~)) financial information or statement, which the director by its rules and regulations requires for the protection of purchasers;

(15) Filing fees and other fees as required by section 36 of this 1987 act and by rules of the director.

The department may abbreviate the application requirements for renewal of registrations, made in a timely manner.

Sec. 8. Section 7, chapter 12, Laws of 1973 1st ex. sess. and RCW 58.19.070 are each amended to read as follows:

The proposed public offering statement, required to be submitted as part of the application for registration or renewal thereof, shall be on a form prescribed by rules and regulations adopted by the director and, unless abbreviated, waived, or altered by the department pursuant to section 16 of this 1987 act or RCW 58.19.100, shall include the following:

(1) The name and principal address of the developer including, if the developer is other than a natural person, the name, address, and percent of ownership for each natural person owning a ten percent or greater interest or share in the developer or the development;

(2) A general description of the development stating the total number of lots, parcels, units, or interests in the offering and to be phased therein;

(3) The significant terms of any encumbrances, easements, liens, and restrictions, including ((~~zoning~~)) those in the project governing instruments and other regulations affecting the development and each unit or lot and a purchaser's use and occupancy thereof, and a statement of all existing association assessments and taxes and existing or proposed special taxes or assessments which affect the development or may be required of purchasers;

(4) A statement of the use for which the property is offered;

(5) Information concerning improvements, including streets, potable water supply, levees, drainage control systems, irrigation systems, sewage disposal facilities, customary utilities, and recreational facilities, and the estimated cost, means of financing, date of completion, and responsibility for construction and maintenance of existing and proposed improvements which are referred to in connection with the offering or disposition of any interest in a development;

(6) A statement of any hazard on or around the development or that might affect purchasers;

(7) If involved with a common-interest community, appropriate sections, determined by rule or order of the director, covering the properties to be owned or managed by the common-interest community, the community's finances, management, budgets, assessments for its members, and the voting rights and procedures for members. Also, the present and future status of developer control and any other pertinent information concerning the common-interest community the department deems necessary for the protection of the public health, safety, and welfare;

(8) Additional information required by the director to assure full ((~~and~~)), fair, and correct disclosure to prospective purchasers.

Sec. 9. Section 8, chapter 12, Laws of 1973 1st ex. sess. and RCW 58.19.080 are each amended to read as follows:

Upon receipt of an application ((~~for registration~~)) in complete and proper form for registration, amendment, or renewal thereof, the director shall immediately initiate an examination to determine that the following requirements are satisfied:

(1) The developer can convey ((~~or cause to be conveyed~~)) to the purchasers the interests or titles promised and has or is assured to perform on delivery of promised facilities and amenities, in a development offered for disposition if the purchaser complies with the terms of the offer, and when appropriate, that release clauses, conveyances in trust, reserve accounts, escrows, nondisturbance agreements, or other safeguards have been provided for such purposes;

(2) The developer has complied with all state and local health ((~~and~~)), zoning, building, planning, and state and local subdivision, common-interest community, and condominium requirements;

(3) The advertising material and the general promotional plan are not false, misleading, or deceptive, afford full, competent, and fair disclosure, and comply with the standards prescribed by the director in its rules and regulations;

(4) The developer has not, or if a corporation, its officers, directors, and principals owning a ten percent or greater interest, have not, been convicted of a crime involving land dispositions or any aspect of the land sales business in this state, the United States, or any other state or foreign country within the past ten years and has or have not been subject to any injunction or administrative order or judgment entered under the provisions of RCW 19.86.080 or 19.86.090 involving a violation or violations of the provisions of RCW 19.86.020 within the past ten years restraining a false or misleading promotional plan involving land dispositions;

(5) The public offering statement requirements of this chapter and rules of the department have been satisfied;

(6) The operating budgets submitted for purposes of registering a common-interest community are competent and contain reasonable provisions for reserve accounts. For such purposes, the department may employ the services of a consultant if the department has cause to believe a budget submitted is not competent, and the applicant or registrant shall pay the reasonable fees of such consultant;

(7) Whether or not a trust depository to hold common-interest community funds is necessary for the protection of the public health, safety, and welfare.

NEW SECTION. Sec. 10. Unless by special conditions in a permit or by rule a greater or lesser period of time is prescribed by the department, a registration shall be limited to and current for a period of one year. Prior to expiration of a permit, in the manner and within the time period prescribed by the department in its rules, the developer must file an application for renewal of the registration. It is unlawful and a violation of this chapter for a developer or its agents to continue selling or advertising the development or interests therein beyond the expiration of a permit to market, until or unless a renewal has been granted. A renewal of registration shall be for a term of one year unless a greater or lesser term is prescribed by the department in rules or the permit to market. If an application for renewal is not submitted in a timely manner, the application shall be treated, for purpose of filing fees and the issuance of a permit to market, in the same manner as an original application.

Sec. 11. Section 9, chapter 12, Laws of 1973 1st ex. sess. and RCW 58.19.090 are each amended to read as follows:

(1) Upon receipt of the application for registration renewal or amendment thereof in proper and complete form, the director shall issue a notice of filing to the applicant. Within thirty days from the date of notice of filing for an in-state development or sixty days for an out-of-state development, the director shall enter an order registering the development or rejecting the registration. If no order of rejection is entered within thirty days from the date of notice of filing for an in-state development or sixty days for an out-of-state development, the ((~~land~~)) offering shall be deemed registered unless the applicant has consented in writing to a delay.

(2) If the director affirmatively determines, upon inquiry and examination that the requirements of RCW 58.19.080 and this chapter have been met, ((he)) the director shall ((~~enter an order~~)) grant a permit to the applicant or registrant registering the development, and the specific lots, units, or interests examined and available for sale purposes and shall designate the form and content of the public offering statement.

(3) If the director determines upon inquiry and examination that any of the requirements of RCW 58.19.080 have not been met, the director shall notify the applicant by means of an order of rejection that the application for registration, renewal, or amendment of registration has been denied and must be corrected in the deficiencies specified. If the deficiencies and requirements for ((~~correction~~)) registration are not met, the director shall enter an order rejecting the ((~~registration~~)) application which shall include the findings of fact upon which the order is based. The final order rejecting the registration, amendment, or renewal thereof shall not become effective for twenty days during which time the applicant may petition for reconsideration and shall be entitled to a hearing.

Sec. 12. Section 10, chapter 12, Laws of 1973 1st ex. sess. and RCW 58.19.100 are each amended to read as follows:

(1) Any development registered under the Interstate Land Sales Full Disclosure Act (82 Stat. 590-599; 15 U.S.C. Sec. 1701-1720) shall, at the developer's request, be registered under this chapter if the developer:

(a) Files with the director a copy of his federal statement of record and property report and copies of all papers, documents, exhibits, and certificates he has filed with or received from the federal government in regard to his federal registration; and

(b) Complies with the provisions of RCW 58.19.080 and 58.19.180, dealing with blanket encumbrances.

Where a developer satisfies items (a) and (b) above, the federal property report for the development ((~~shall~~)) may qualify and be accepted as the public offering statement under this chapter. However, the department shall supply the format within which the disclosures shall appear and supplement disclosures and informational areas in the federal document as deemed necessary for the protection of public health, safety, and welfare.

(2) State registration under this section shall only be valid and current so long as:

(a) The developer's federal registration is valid and current and there is compliance with this chapter; and

(b) The director is promptly advised of any change in the developer's federal registration and is promptly provided with copies of all papers, documents, exhibits and certificates relating to the development which the developer has filed with or received from the federal government subsequent to the date on which his federal registration was granted.

(((3) Except as provided otherwise in this subsection, the provisions of this chapter shall apply to developments registered under this section. RCW 58.19.060 through 58.19.090 and 58.19.110 through 58.19.130 shall not apply to developments having a valid and current registration under this section.))

Sec. 13. Section 11, chapter 12, Laws of 1973 1st ex. sess. and RCW 58.19.110 are each amended to read as follows:

If the developer adds to its inventory and registers ((an)) additional lots, units, or interests in a development to be offered for disposition, ((~~he may consolidate~~)) the developer shall do so by consolidating the subsequent registration with any earlier registration ((~~offering a development for disposition under the same promotional plan~~)).

Sec. 14. Section 12, chapter 12, Laws of 1973 1st ex. sess. and RCW 58.19.120 are each amended to read as follows:

(1) The developer shall, as soon as he or she is reasonably certain of such changes, immediately report to the director any material changes in the information contained in ((~~his~~)) the registration or the application for registration. No change in the substance of the promotional plan or plan of disposition or ((~~completion of~~)) material conditions or events affecting the development may be made or occur after registration without notifying the director and without making appropriate amendment of the registration and the public offering statement. A public offering statement is not current for purposes of complying with this chapter, unless it incorporates all amendments and the information therein as kept reasonably current, particularly with reference to changes and events that are material or adverse to the interests of purchasers.

(2) By rule, the department shall determine those events that constitute a material change.

Sec. 15. Section 13, chapter 12, Laws of 1973 1st ex. sess. and RCW 58.19.130 are each amended to read as follows:

(1) No portion of the public offering statement form may be underscored, italicized, or printed in larger or heavier or different color type than the remainder of the statement unless the director so requires. By rule, the department shall prescribe the print size, content, and format of the document.

(2) The department may provide its own disclosures in the public offering statement. No purchaser, third party, or other person shall have a cause of action against the department for alleged deficiencies in the disclosures. Developers, however, have a right under chapter 34.04 RCW to an administrative hearing, if a proper request is made after notice of deficiencies or required information in the disclosures from the department, to determine if the disclosures prescribed by the department are competent, factual, and necessary for the protection of the public health, safety, and welfare.

NEW SECTION. Sec. 16. (1) The director may by rule, order, or conditions agreed to in the permit, abbreviate or otherwise alter the disclosure requirements of RCW 58.19.070 if:

(a) A combination of local regulatory controls, developer affidavits, and departmental investigation lead the director to believe that the purchasers' interests are protected and the general purposes of this chapter are accomplished;

(b) A developer has an existing and current registration under the federal interstate land sales full disclosure act (82 Stat. 590 through 599, -- U.S.C. Sec. 1701 through 1720) or a similar statute of another state. Under such circumstances, the director may accept in whole or in part the federal or state written disclosures and registration documentation to satisfy the disclosure and registration requirements of this chapter;

(c) The project involves or the developer is offering a combination of different forms of interests, such as those that might be covered under this chapter, chapter 19.105 RCW (camping club act), or chapter 64.36 RCW (timeshare act). In such cases, the director may consolidate or amend such registrations or the registration requirements of those statutes and their disclosure requirements in any manner that will best serve the interests of purchasers of lots, units, or interests offered in such combinations or mixed-use projects;

(d) The development is sited outside the boundaries of this state and there is in effect and current, a registration in the state where sited. In such cases, the director may accept in whole or in part the registration or written disclosure of such foreign jurisdiction, for purposes of satisfying the disclosure and registration requirements of this chapter.

(2) Such abbreviated, modified, or consolidated registrations shall be conditional and at the discretion of the department. If the developer fails to comply with the conditions in the permit, or if for any reason the director believes that a full customary registration best serves the interests of the public, abbreviated registrations may be revoked or denied and a full, customary registration required.

Sec. 17. Section 15, chapter 12, Laws of 1973 1st ex. sess. and RCW 58.19.150 are each amended to read as follows:

(1) If it appears to the director at any time that a registration or public offering statement currently in effect includes any statement that is false, misleading, or deceptive, or that a material change has occurred or will occur that renders its content false, deceptive, incomplete, or inaccurate, the director may, after notice and after opportunity for hearing ((~~(at a time fixed by the director) within fifteen days after such notice~~)) pursuant to the administrative procedure act, chapter 34.04 RCW, issue an order suspending the public offering statement and the registration. When such statement or registration has been amended in accordance with such order, the director shall so declare and thereupon the order of suspension shall cease to be effective. This subsection shall not preclude the director from issuing a statement of charges covering alleged violations of this chapter or its implementing rules, or an order of temporary suspension of a registration or a temporary order to cease from advertising and selling, covered under RCW 58.19.210, summarily and immediately suspending all sales and offers, under circumstances where it appears there is immediate peril to the public or that the interests of purchasers may be materially and adversely affected without an immediate cessation of sales. In instances where a summary order has been issued, the registrant shall be entitled to a prompt hearing pursuant to RCW 34.04.170.

(2) The director is hereby empowered to make an examination in any case to determine whether an order should issue under subsection (1) of this section or RCW 58.19.210. In making such examination, the director or anyone designated by the director shall have access to, and may demand the production of any books and papers of, and may administer oaths and affirmations to, and may examine, the developer, any agents, or any other person, in respect to any matter relevant to the examination. If the developer or any agents shall fail to cooperate, or shall obstruct or refuse to permit the making of an examination, such conduct shall be proper ground for the issuance of an order suspending the developer's public offering statement or registration.

Sec. 18. Section 16, chapter 12, Laws of 1973 1st ex. sess. and RCW 58.19.160 are each amended to read as follows:

(1) A copy of the public offering statement issued on ((~~land within~~)) a development covered by this chapter shall be given by the director or by the developer or its agents, upon oral or written request, to any member of the public.

(2) There shall be no charge for the first copy of the document other than (a) a reasonable charge for nonpurchasers for any attached documentation or exhibits, and (b) the costs prescribed by rules of the department if the department is to provide the document.

Sec. 19. Section 17, chapter 12, Laws of 1973 1st ex. sess. and RCW 58.19.170 are each amended to read as follows:

(1) A copy of the public offering statement, excluding department-required attachments, issued on ((~~land within~~)) a development covered by this chapter shall be given by the developer or his agents or salesmen((~~, upon oral or written request,~~)) to every adult or head of a family who ((~~visits the site of a development~~)) attends a sales presentation as a prospective purchaser, whether or not such persons make a purchase.

(2) The entire public offering statement, including all attachments, in a format determined by the department, shall be provided all actual purchasers.

Sec. 20. Section 18, chapter 12, Laws of 1973 1st ex. sess. and RCW 58.19.180 are each amended to read as follows:

No development may be registered and it shall be unlawful for ((~~the~~)) any developer to make a sale of lots ((or)), parcels, units, or interests within a development which is subject to a blanket encumbrance ((~~which does not contain, within its terms or by supplementary agreement, a provision which shall unconditionally provide that the purchaser of a lot or parcel encumbered thereby can obtain~~)) or significant lien, unless by deed releases, nondisturbance agreements, subordination agreements, escrows, trusts, or other arrangements acceptable to the department, the developer and its agents is assured to be able to provide the purchaser with the legal title((,)) or other interest contracted for, free and clear of ((~~the~~)) significant liens ((~~of such~~)), blanket encumbrances, or other contingencies upon compliance with the terms and conditions of the purchase((~~, unless~~)) agreement. The developer shall elect and comply with one ((~~of the following alternative conditions:~~

(1) The developer shall deposit in an escrow depository acceptable to the director: In cases where the blanket encumbrance does not provide for partial release, all or such portions of the money paid or advanced by the purchaser on any such lot or parcel within said development as the director shall determine to be sufficient to protect the interest of the purchaser; or in cases where the blanket encumbrance provides for partial releases thereof which are not unconditional, the developer shall deposit, at such time as the balance due to the developer from such purchasers is equal to the sum necessary to procure a release of such lots or parcels contracted for from the lien of such blanket encumbrance, all of the sums thereafter received from such purchasers until either:

~~(a) A proper release is obtained from such blanket encumbrance;~~

(b) Either the developer or the purchaser defaults under the sales contract and there is a forfeiture of the interest of the purchaser or there is a determination as to the disposition of such moneys, as the case may be; or

~~(c) The developer orders a return of such moneys to such purchaser.~~

~~(2) The title to the development is held in trust under an agreement of trust acceptable to the director until the proper release of such blanket encumbrance is obtained.~~

(3) A bond to the state of Washington or such other proof of financial responsibility is furnished to the director for the benefit and protection of purchasers of such lots or parcels in such an amount and subject to such terms, as may be approved by the director, which shall provide for the return of moneys paid or advanced by any purchaser on account of a sale of any such lot or parcel if a proper release from such blanket encumbrance is not obtained: PROVIDED, That if it should be determined that such purchaser, by reason of default, or otherwise, is not entitled to the return of such moneys or any portion thereof, such bond or other proof of financial responsibility shall be exonerated to the extent and in the amount thereof. The amount of the bond or other proof of financial responsibility may be increased or decreased or a bond may be waived from time to time as the director shall determine)) or any combination of devices acceptable to the department to assure titles, protection of purchasers' down payments, and future quiet enjoyment of the promised lots, units, or interests and the supporting amenities and facilities, pursuant to RCW 58.19.080.

NEW SECTION. Sec. 21. (1) No lender, underlying owner, their successors in interest, or other person, owning or holding a mortgage, deed of trust, real estate contract, promissory note, pledge of receivables, or other security instrument transacted after the effective date of this section, encumbering or affecting title to or ownership of a subdivision or common-interest community covered under this chapter and sited in this state, shall foreclose upon, take title to, or dispossess a bona fide purchaser in good standing, of a lot, unit, or interest in such subdivision or common-interest community under the following circumstances:

(a) The person holds legal title to the property and is selling or has sold the property to the developer on a real estate contract or similar delayed-payment arrangement and at the time of the sale transaction: (i) Was aware that the buyer, its affiliates, or its successors in interest, would be developing the property under chapter 58.17 RCW and local subdivision ordinances or as a condominium or real estate cooperative; or (ii) failed to place provisions in a sale transaction specifically reserving unto itself the right to foreclose upon or take other specified action against future purchasers;

(b) The holder or owner is a person who has made a loan to a developer, or any other person, its assignor, or its successor in interest, knowing that the loan was for the purpose of developing the property as a subdivision under chapter 58.17 RCW and local ordinances, a condominium, or a real estate cooperative;

(c) The holder or owner is a person who has signed the articles, covenants, plats, declarations, or other documentation concerned with or essential to the establishment or structuring of the development;

(d) The holder or owner is an affiliate, as defined in this chapter, a successor in interest of the developer with knowledge, a marketing agent of the developer, or a person owning a ten percent or greater interest in the developer or the development in situations described in (a), (b), or (c) of this subsection.

(2) Subsequent to the effective date of this section, it is unlawful and a violation of this chapter for any person who is or proposes to be, a holder or owner of a security instrument or a blanket encumbrance as defined in RCW 58.19.010(1), or who prepares or signs a security instrument which is the subject of this section, to include wilfully and knowingly in the security instrument any provision that runs contrary to the provisions of this section.

(3) Nothing in this section precludes a person from becoming a holder or owner of a security instrument covering a purchaser's title to, interest in, or right to possession of a lot, unit, or interest, when such security instruments have resulted from, or are for the purpose of, a take-out loan or other transaction entered into directly by the purchaser with the holder or owner or its assignors for the purposes of purchasing the lot, unit, or interest.

(4) Any holder or owner of a security instrument or other person not covered under subsection (1) (a), (b), (c), or (d) of this section who was not aware that the developer intended to develop the property at the time of the sale or security transaction, who subsequently does learn of the developer's or other person's intent to develop, or of any development activity affecting the property or the security interest, must within ten days after learning of development activity or the developer's intent to develop, have notified the appropriate agency of the local jurisdiction or the department of the holder's intent to reserve its rights of foreclosure or other action to assure its security interest in the property, and its objection to releasing purchasers of lots, units, or interests from its security rights. Otherwise, such owners or holders of security interests shall have consented to compliance with this section with respect to the protections it offers purchasers and to have waived all foreclosure or other security rights, and shall not name purchasers as defendants in any foreclosure or other action to dispossess against a developer or its successors.

(5) Whenever a local jurisdiction in which a property subject to this section is sited learns through the developer, or by other means, of a security instrument that affects lands or common-interest communities covered under this section, the local jurisdiction shall provide notice of any developer application or development activity affecting the property to such holder or owner of the security instrument. It shall be the responsibility of the developer to provide the local agency and the department with the current address of any security instrument holder.

(6) (a) Holders or owners of security instruments other than those covered under subsection (1) (a), (b), (c), or (d) of this section, who were not aware of development activity, are not excluded from foreclosure actions affecting or naming purchasers, lawful under their security instrument, provided that if they do object to releasing bona fide purchasers of lots, units, or interests from foreclosure actions, or other actions adversely affecting purchaser titles, within ten days of receiving notice from the local jurisdiction or learning of development activity, they give notice by certified mail to the local jurisdiction of their objection to releasing bona fide purchasers of lots, units, or interests, from foreclosures or other security transactions.

(b) Failure to provide such notice in a timely manner shall preclude the holder or owner of the security instrument from dispossessing a purchaser, naming a purchaser as a defendant, or from any action adversely affecting the purchaser's legitimate claim to title or interest.

(7) (a) Local jurisdictions shall not certify developments for exemptions under RCW 58.19.030(11)(g) when they are aware of holders or owners of security instruments that have filed notices under subsection (4) of this section, objecting to the release of purchasers from security instruments under this chapter unless appropriate arrangements to secure titles and purchaser funds have been approved by the department.

(b) The department shall require in instances where there are security holders or encumbrances that could pose a hazard to purchaser titles, that arrangements to secure purchaser titles as required under RCW 58.19.080 be in place as a condition to granting an exemption or a registration.

(8) It is the responsibility of the developer filing an application with local jurisdictions for a subdivision approval under chapter 58.17 RCW and local ordinances, to provide the local jurisdiction, and the department when later applying for registration or an exemption, to identify and supply other required information about all encumbrances, liens, and security instruments affecting the developed lands. Wilful or negligent failure to identify encumbrances, liens, and judgments affecting a property is a violation of this chapter.

(9) Any purchaser prevailing under the provisions of this section in any foreclosure or other legal action filed by a holder or owner of a security instrument against that person, or, in instances where a purchaser files his or her own legal action alleging violations of this section against a developer, holder, or owner of a security instrument or other persons, shall be allowed damages, costs, reasonable attorneys' fees, and/or injunctive relief to compel compliance. No cause of action shall lie against any local jurisdiction or the department in any such action.

NEW SECTION. Sec. 22. In any registration or application for registration or renewal under this chapter where it appears to be in the interest of the public health, safety, and welfare, the department may require that common-interest community operational funds, capital improvement funds, or reserve account funds be placed in a trust for the protection of the public health, safety, and welfare.

NEW SECTION. Sec. 23. (1) In a manner not contrary to the existing laws of this state, the director may require, as a condition to registration under this chapter, that an applicant or registrant perform the following:

(a) Provide a location where financial records, governing documents, tax filings, a membership list, voting records, and minutes and records of board and membership meetings may be reviewed by the membership during normal business hours;

(b) Provide any member, upon request, with a copy of the annual audit prepared by an accountant independent of the board or the developer. For any common-interest community containing fifty or fewer members and no longer developer-controlled, the independent audit may be waived for any given year by a majority vote of the members. For any given fiscal or calendar year for which an annual audit is not for any reason available, the developer, if the common-interest community is developer-controlled, or the common-interest community, if the common-interest community is not developer-controlled, shall provide in lieu thereof the following information:

(i) A profit and loss statement or a statement showing all income and the cash disbursements covering each line item of the budget and other disbursements for the preceding year; and

(ii) The location, amounts, purposes, and signatures for release of all funds and assets owned or managed by the common-interest community;

(c) Except in instances of emergency, provide at least thirty days' notice in advance of all normally scheduled board meetings, attendance at which shall be open to the members. The notice shall include the proposed agenda of the meeting;

(d) Except in instances of emergency, provide at least sixty days' notice to each member of any membership meetings, such meetings to be held at least once annually and the notice to include the proposed agenda;

(e) Prepare and provide to each member at least thirty days' notice prior to the meeting or other action to formally adopt the proposed annual budget. The budget shall be formatted, line by line, for all items of expense and shall include funding of reserve accounts;

(f) Provide notice to each member of any proposed amendments to the covenants, articles, declarations, bylaws, or administrative rules of the common-interest community at least thirty days prior to enactment, unless the amendment is emergency in nature and subject to a later majority vote of acceptance by the members;

(g) If the membership has voting rights, provide the membership with an opportunity to vote by mail or proxy as an alternative to a personal appearance at any meeting; and

(h) Make available to the members within thirty days of the meetings, a copy of the transcribed minutes or summary of the proceedings at any board or annual meeting.

(2) The provisions of this section apply to all common interest communities in this state, whether or not registered with the department and notwithstanding the provisions of any development documentation or governing instruments or local ordinance with provisions to the contrary, unless an existing state statute specifically requires performance otherwise.

NEW SECTION. Sec. 24. (1) Concerning any common-interest community registered under this chapter and sited in this state, it is a violation of this chapter for any sponsoring and controlling developer, common-interest community, board of directors of a common-interest community, or other responsible person, to fail to provide a membership list, including names, addresses, and lot, unit, or interest owned, under the following circumstances:

(a) Upon demand or by rule or order of the director for whatever purpose deemed necessary to administer or amend this chapter;

(b) Upon written request by certified mail by a member of the common-interest community, to a declarant, developer, promoter, sponsor, operator, or other person who has established and is still in control of the common-interest community; and

(c) Upon written request by certified mail by a member of a common-interest community to the board of directors or appropriate officer of the common-interest community or an affiliated common-interest community.

(2) The board of directors of the common-interest community may require that any applicant for a membership list, other than the director, pay reasonable costs for providing the list and sign an affidavit that the applicant will not use and will be responsible for any use of the list for commercial purposes.

(3) Upon request, member-owners' names shall be excluded from membership lists available to any person other than the director. Such members shall make their request for exclusion in writing by certified mail to the board of directors or the appropriate officer or director of the common-interest community.

(4) It is unlawful for any person to use a membership list obtained pursuant to this section for commercial purposes, unless written permission to do so has been received from the board of directors or appropriate officer of the common-interest community. Boards of directors shall not authorize commercial use of a name if a member has made a written request for exclusion of his or her name for commercial use under this section. Wilful use of a membership list for commercial purposes without such permission or after being provided with a notice by the member or association, shall subject the violator to damages, costs, and reasonable attorneys' fees in any proceedings in which a member or common-interest community prevails in an allegation of violation of this section. Members or a common-interest community may petition the courts of this state and obtain orders restraining such commercial use.

(5) Common-interest communities under the jurisdiction of chapter 24.03 RCW are exempt from any provisions of this section that run contrary to chapter 24.03 RCW.

Sec. 25. Section 19, chapter 12, Laws of 1973 1st ex. sess. and RCW 58.19.190 are each amended to read as follows:

No person shall publish in this state any advertisement concerning a development subject to the registration requirements of this chapter after the director finds that the advertisement contains any statements that are false, misleading, or deceptive and so notifies the person in writing. Such notification may be given summarily without notice or hearing. At any time after the issuance of a notification under this section, the person desiring to use the advertisement may in writing request the order be rescinded. Upon receipt of such a written request, the matter shall be set down for hearing to commence within fourteen days after such receipt unless the person making the request consents to a later date. After such hearing, which shall be conducted in accordance with the provisions of the administrative procedure act, chapter 34.04 RCW, the director shall determine whether to affirm and to continue or to rescind such order and shall have all powers granted under such act.

NEW SECTION. Sec. 26. (1) No person, including a developer, may advertise, sell, contract for, solicit, arrange, or promise a free gift, an award, a prize, or other item of value to residents of this state as a condition for attending a sales presentation, touring a facility, or performing other activities in connection with the offer or sale of a lot, unit, or interest in a land development covered under this section without first providing the director with a bond, letter of credit, cash depository, or other security arrangement that will assure performance by the promisor and delivery of the promised gift, award, sweepstakes, prize, or other item of value.

(2) Developers under this chapter shall be strictly liable for delivering promised gifts, prizes, awards, or other items of value offered or advertised in connection with the marketing of land developments.

(3) Persons promised but not receiving gifts, prizes, awards, or other items of consideration covered under this section, shall be entitled in any cause of action in the courts of this state in which their causes prevail, to be awarded treble the stated value of the gifts, prizes, or awards, court costs, and reasonable attorneys' fees.

(4) The director may require that any fees or funds of any description collected from persons in advance, in connection with delivery by the promisor of gifts, prizes, awards, or other items of consideration covered under this section, be placed in a depository in this state, where they shall remain until performance by the promisor.

(5) The director may require commercial promotional programs covered under this section to be registered and that persons promoting such programs provide to the department whatever information, including financial information covering the applicant and evidence of delivery of promised items, it deems necessary for protection of the public health, welfare, and safety.

(6) Promoters of commercial promotional programs covered under this section may be required to sign a consent to service of process, running for a term of five years after the date of last disposition of a lot, unit, or interest in the development, authorizing the director as the agent to receive service of legal process in civil actions arising out of alleged violations of this chapter.

(7) No registrant, its agents, or other persons may take possession of promotional materials covered under this section from recipients, holders, or owners thereof, who have received the materials for purposes of attending a sales presentation or touring a development, without the permission of such person, and providing such persons with a signed true copy of such promotional materials. The department shall adopt such rules as are necessary to enforce this subsection.

Sec. 27. Section 20, chapter 12, Laws of 1973 1st ex. sess. and RCW 58.19.200 are each amended to read as follows:

(1) The director may:

(a) Make necessary public or private investigations within or outside of this state to determine whether any person has violated or is about to violate this chapter or any rule, regulation, or order ((~~hereunder~~)) under this chapter, or to aid in the enforcement of this chapter or in the prescribing of rules and forms ((~~hereunder~~)) under this chapter;

(b) Require or permit any person to file a statement in writing, under oath or otherwise as the director determines, as to all facts and circumstances concerning the matter to be investigated.

(2) For the purpose of any investigation or proceeding under this chapter, the director or any officer designated by rule may administer oaths or affirmations, and upon his or her own motion or upon request of any party may subpoena witnesses, compel their attendance, take evidence, and require the production of any matter which is relevant to the investigation, including the existence, description, nature, custody, condition, and location of any books, documents, or other tangible things and the identity and location of persons having knowledge or relevant facts, or any other matter reasonably calculated to lead to the discovery of material evidence.

(3) Upon failure to obey a subpoena or to answer questions propounded by the investigating officer and upon reasonable notice to all persons affected thereby, the director may apply to the superior court for an order compelling compliance.

(4) Except as otherwise provided in this chapter, all proceedings under this chapter shall be in accordance with the administrative procedure act, chapter 34.04 RCW.

Sec. 28. Section 21, chapter 12, Laws of 1973 1st ex. sess. and RCW 58.19.210 are each amended to read as follows:

(1) If the director determines after notice and hearing that a person has:

(a) Violated any provision of this chapter, the rules of the director, or conditions in a permit to market or registration issued under this chapter;

(b) Directly or through an agent or employee engaged in any false, deceptive, or misleading advertising, promotional, or sales methods to offer or dispose of an interest in developed lands;

(c) Made any substantial change in the plan of disposition and completion of the development subsequent to the order of registration without obtaining prior written approval from the director;

(d) Disposed of any interest in a development required to be registered under this chapter which has not been so registered with the director;

(e) Proposed, caused, or threatened to cause the interference with or breaching of any escrow, trust, reserve account, or other security arrangement required under RCW 58.19.080, section 22 of this 1987 act, or elsewhere in this chapter;

(f) Violated any lawful order, rule or regulation of the director; ((he)) the director may issue an order requiring the person to cease and desist from the unlawful practice and to take such affirmative action as in the judgment of the director will carry out the purposes of this chapter.

(2) If the director makes a finding of fact in writing that the public interest will be irreparably harmed by delay in issuing an order, ((he)) the director may issue a temporary cease and desist order. Prior to issuing the temporary cease and desist order, the director whenever possible by telephone or otherwise shall give notice of the proposal to issue a temporary cease and desist order to the person. Every temporary cease and desist order shall include in its terms a provision that upon request a hearing will be held to determine whether or not the order becomes permanent.

(3) If it appears that a person has engaged or is about to engage in an act or practice constituting a violation of a provision of this chapter, or a rule or order hereunder, the director, with or without prior administrative proceedings, may bring an action in the superior court to enjoin the acts or practices and to enforce compliance with this chapter or any rule, regulation, or order hereunder. Upon proper showing, injunctive relief or temporary restraining orders shall be granted, and a receiver or conservator may be appointed. The director shall not be required to post a bond in any court proceedings.

Sec. 29. Section 22, chapter 12, Laws of 1973 1st ex. sess. and RCW 58.19.220 are each amended to read as follows:

(1) A registration may be revoked or suspended after notice and hearing upon a written finding of fact that the developer or its agent or affiliate has:

(a) Failed to comply with the terms of a cease and desist order or conditions in a permit to market or registration;

(b) Been convicted in any court subsequent to the filing of the application for registration for a crime involving fraud, deception, false pretense, misrepresentation, false advertising, or dishonest dealing in real estate transactions;

(c) Disposed of, concealed, or diverted any funds or assets of any person so as to defeat the rights of development purchasers or the members of a common-interest community;

(d) ((~~Repeatedly~~)) Failed to perform any stipulation or agreement made with the director, or breached a trust, escrow, or any other security required as an inducement to grant any registration, to reinstate any registration, or to approve any promotional plan or public offering statement;

(e) Made intentional misrepresentations or concealed material facts in an application for registration, in a registration amendment or renewal, or in its sales activities;

(f) Failed to maintain for any reason, a required trust, escrow, or other security arrangement;

(g) Failed to pay any fees required under this chapter; or

(h) Has violated or failed to comply with any provision of this chapter, the rules adopted hereunder, a condition in the permit to market, or order of the director.

Findings of fact, if set forth in statutory language, shall be accompanied by a concise and explicit statement of the underlying facts supporting the findings.

(2) If the director finds after notice and hearing that the developer has been guilty of a violation for which revocation or suspension could be ordered, ((he)) the director may issue a cease and desist order instead of ordering revocation.

(3) The director may establish penalties not exceeding five hundred dollars for each violation, for registrants in any situation where a registrant has failed to file an amendment to the registration or the public offering statement in a timely manner for material changes, as required in this chapter and rules adopted under this chapter.

Sec. 30. Section 23, chapter 12, Laws of 1973 1st ex. sess. and RCW 58.19.230 are each amended to read as follows:

In any suit by or against a developer involving his or her development, the developer shall promptly ((~~shall~~)) furnish the director notice of the suit and copies of all pleadings. ((~~This section shall not apply where the director is a party to the suit.~~))

Sec. 31. Section 26, chapter 12, Laws of 1973 1st ex. sess. and RCW 58.19.260 are each amended to read as follows:

In addition to the powers granted the director under other sections of this chapter, the director may:

(1) Intervene in a suit involving a development registered under this chapter;

(2) Accept information contained in registrations filed in other states;

(3) Contract with similar agencies in this state, any other state, or with the federal government to perform investigative functions;

(4) Accept grants in aid from any source;

(5) Cooperate with similar agencies in other states and with the federal government to establish, insofar as practical, uniform filing procedures and forms, uniform public offering statements, advertising standards and rules, and common administrative practices;

(6) Publish information concerning any administrative or enforcement proceedings under this chapter; and

(7) Publish and disseminate educational and informational materials, at cost, for benefit of the public and facilitating registrations.

NEW SECTION. Sec. 32. Applicants or registrants under this chapter shall pay fees determined by the director as provided in RCW 43.24.086. These fees shall be prepaid and the director may establish fees for the following:

(1) Processing an original application for registration of an offering, along with an additional fee for each lot, unit, or interest registered;

(2) Processing consolidations or adding additional inventory into the registration;

(3) Reviewing and granting exemptions and waivers;

(4) Reviewing nonregistration permits under section 4 of this act;

(5) Processing annual or periodic renewals;

(6) Reviewing proposed dispositions by auctioneering under section 6 of this act;

(7) Initially and annually processing and administering any required impound, trust, or escrow arrangement;

(8) Reviewing of advertising or promotional materials;

(9) Conducting site inspections of registered and to be registered projects;

(10) Processing amendments; and

(11) The publication and dissemination of educational materials.

NEW SECTION. Sec. 33. (1) The director may require inspections of projects registered under this chapter and developers and their agents shall cooperate by permitting staff of the department to conduct the inspections.

(2) The director may perform "spot checks" or inspections of sales offices during tours or sales presentations or normal business hours for purposes of enforcing this chapter and determining compliance by the developer and salespersons in the sales, advertising, and promotional activities regulated under this chapter. These inspections or spot checks may be conducted during or at the time of sales presentations or during the hours during which sales are ordinarily scheduled.

(3) The department employee making the inspections shall show identification upon request. It is a violation of this chapter for the developer or its sales representatives to refuse an inspection or refuse to cooperate with employees of the department conducting the inspection.

NEW SECTION. Sec. 34. A registrant or applicant against whom an administrative or legal proceeding authorized under this chapter has been filed by the department and in which the department prevails, shall be liable for and reimburse to the state by payment into the general fund, all investigative, administrative, and legal costs, including attorneys' fees, incurred by the department in the administrative or legal proceedings.

Sec. 35. Section 30, chapter 12, Laws of 1973 1st ex. sess. and RCW 58.19.300 are each amended to read as follows:

If, after disposition of all or any portion of a development which is covered by this chapter, a condition constituting a hazard is discovered ((~~on or around the development~~)), the developer ((~~or government agency discovering such condition~~)) shall notify the director immediately. After receiving such notice, the director ((~~shall~~)) may forthwith take ((~~all~~)) any steps the director deems necessary to ((~~notify~~)) assure that the developer notifies the owners of the affected ((~~lands either by transmitting notice through the appropriate county assessor's office or such other steps as might reasonably give actual notice to the owners~~)) development, and the developer shall be responsible for providing the notice.

Sec. 36. Section 35, chapter 12, Laws of 1973 1st ex. sess. and RCW 58.19.940 are each amended to read as follows:

This chapter may be cited as the land development act ((~~of 1973~~)).

Sec. 37. Section 31, chapter 1, Laws of 1973 as last amended by section 7, chapter 276, Laws of 1986 and by section 25, chapter 299, Laws of 1986 and RCW 42.17.310 are each reenacted and amended to read as follows:

(1) The following are exempt from public inspection and copying:

(a) Personal information in any files maintained for students in public schools, patients or clients of public institutions or public health agencies, welfare recipients, prisoners, probationers, or parolees.

(b) Personal information in files maintained for employees, appointees, or elected officials of any public agency to the extent that disclosure would violate their right to privacy.

(c) Information required of any taxpayer in connection with the assessment or collection of any tax if the disclosure of the information to other persons would (i) be prohibited to such persons by RCW 82.32.330 or (ii) violate the taxpayer's right to privacy or result in unfair competitive disadvantage to the taxpayer.

(d) Specific intelligence information and specific investigative records compiled by investigative, law enforcement, and penology agencies, and state agencies vested with the responsibility to discipline members of any profession, the nondisclosure of which is essential to effective law enforcement or for the protection of any person's right to privacy.

(e) Information revealing the identity of persons who file complaints with investigative, law enforcement, or penology agencies, other than the public disclosure commission, if disclosure would endanger any person's life, physical safety, or property: PROVIDED, That if at the time the complaint is filed the complainant indicates a desire for disclosure or nondisclosure, such desire shall govern: PROVIDED, FURTHER, That all complaints filed with the public disclosure commission about any elected official or candidate for public office must be made in writing and signed by the complainant under oath.

(f) Test questions, scoring keys, and other examination data used to administer a license, employment, or academic examination.

(g) Except as provided by chapter 8.26 RCW, the contents of real estate appraisals, made for or by any agency relative to the acquisition or sale of property, until the project or prospective sale is abandoned or until such time as all of the property has been acquired or the property to which the sale appraisal relates is sold, but in no event shall disclosure be denied for more than three years after the appraisal.

(h) Valuable formulae, designs, drawings, and research data obtained by any agency within five years of the request for disclosure when disclosure would produce private gain and public loss.

(i) Preliminary drafts, notes, recommendations, and intra-agency memorandums in which opinions are expressed or policies formulated or recommended except that a specific record shall not be exempt when publicly cited by an agency in connection with any agency action.

(j) Records which are relevant to a controversy to which an agency is a party but which records would not be available to another party under the rules of pretrial discovery for causes pending in the superior courts.

(k) Records, maps, or other information identifying the location of archaeological sites in order to avoid the looting or depredation of such sites.

(l) Any library record, the primary purpose of which is to maintain control of library materials, or to gain access to information, which discloses or could be used to disclose the identity of a library user.

(m) Financial information supplied by or on behalf of a person, firm, or corporation for the purpose of qualifying to submit a bid or proposal for (a) a ferry system construction or repair contract as required by RCW 47.60.680 through 47.60.750 or (b) highway construction or improvement as required by RCW 47.28.070.

(n) Railroad company contracts filed with the utilities and transportation commission under RCW 81.34.070, except that the summaries of the contracts are open to public inspection and copying as otherwise provided by this chapter.

(o) Financial and commercial information and records supplied by private persons pertaining to export services provided pursuant to chapter 53.31 RCW.

(p) Financial disclosures filed by private vocational schools under chapter 28C.10 RCW.

(q) Membership lists or lists of members or owners of membership interests of units in land developments and common-interest communities or other public offerings regulated by the department of licensing, in the files or possession of the department.

(2) Except for information described in subsection (1)(c)(i) of this section and confidential income data exempted from public inspection pursuant to RCW 84.40.020, the exemptions of this section are inapplicable to the extent that information, the disclosure of which would violate personal privacy or vital governmental interests, can be deleted from the specific records sought. No exemption may be construed to permit the nondisclosure of statistical information not descriptive of any readily identifiable person or persons.

(3) Inspection or copying of any specific records exempt under the provisions of this section may be permitted if the superior court in the county in which the record is maintained finds, after a hearing with notice thereof to every person in interest and the agency, that the exemption of such records is clearly unnecessary to protect any individual's right of privacy or any vital governmental function.

(4) Agency responses refusing, in whole or in part, inspection of any public record shall include a statement of the specific exemption authorizing the withholding of the record (or part) and a brief explanation of how the exemption applies to the record withheld.

NEW SECTION. Sec. 38. (1) This act shall take effect on .......... .

(2) Lenders or holders of security interests affecting developments registered on the effective date of this section are exempt from section 21 of this act.

(3) Developers registered before January 1, 1987, shall have at least six months from that date to comply with the renewal provisions of section -- of this act.

(4) Offerings of lots or units in subdivisions, platted pursuant to chapter 58.17 RCW, registered with the department as of February 1, 1987, shall be excepted from RCW 58.19.080 as amended by this act.

(5) Developments that were not, but should have been, registered under chapter 58.19 RCW prior to the effective date of this section shall not be exempted from registration or have a change in their exemption status because of any provisions of this act.

NEW SECTION. Sec. 39. The following acts or parts of acts are each repealed:

(1) Section 4, chapter 12, Laws of 1973 1st ex. sess. and RCW 58.19.040;

(2) Section 1, chapter 252, Laws of 1977 ex. sess. and RCW 58.19.185;

(3) Section 29, chapter 12, Laws of 1973 1st ex. sess. and RCW 58.19.290;

(4) Section 31, chapter 12, Laws of 1973 1st ex. sess. and RCW 58.19.900; and

(5) Section 32, chapter 12, Laws of 1973 1st ex. sess. and RCW 58.19.910.

NEW SECTION. Sec. 40. Sections 4, 5, 10, 16, 21 through 24, 26, and 32 through 34 of this act are each added to chapter 58.19 RCW.