Z-572 _______________________________________________
HOUSE BILL NO. 1656
_______________________________________________
State of Washington 51st Legislature 1989 Regular Session
By Representative Crane
Read first time 2/1/89 and referred to Committee on Judiciary.
AN ACT Relating to the regulation of the sale of lands; amending RCW 58.19.010, 58.19.020, 58.19.030, 58.19.050, 58.19.070, 58.19.120, 58.19.130, 58.19.140, 58.19.170, 58.19.180, 58.19.190, 58.19.270, 58.19.300, and 58.19.940; adding a new section to chapter 58.19 RCW; and repealing RCW 58.19.040, 58.19.060, 58.19.080, 58.19.090, 58.19.100, 58.19.110, 58.19.150, 58.19.160, 58.19.200, 58.19.210, 58.19.220, 58.19.230, 58.19.240, 58.19.250, 58.19.260, 58.19.290, 58.19.900, 58.19.910, and 58.19.930.
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 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, 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)) the reasonable ((program of state
registration and)) regulation of the sale and offering for sale of any
interest in significant land developments 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 agent of an inactive owner.
(((4)))
(3) "Development" or "developed lands" means land
which is divided or is proposed to be divided for the purpose of disposition
into ten or more lots, parcels, or units (excluding interests in camping ((clubs))
resorts 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 advertising and sale.
(((5)))
(4) "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)))
(5) "Offer" includes every inducement, solicitation, or media
advertisement which has as a principal aim to encourage a person to acquire an
interest in land.
(((7)))
(6) "Hazard" means all existing or proposed unusual conditions
relating to the location of the development, noise, safety, or other nuisance
which affect or might affect the development or the purchaser's interest
therein.
(((8)))
(7) "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)))
(8) "Purchaser" means a person who acquires or attempts to
acquire or succeeds to any interest in land.
(((10)))
(9) "Residential buildings" shall mean premises that are
actually intended or used as permanent residences of the purchasers and that
are not devoted exclusively to any other purpose.
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 provisions of this chapter shall not apply to land and offers or
dispositions:
(((a)))
(1) By a purchaser of developed lands for his 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))) (2) 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));
(((e)))
(3) To any person who acquires such lot, parcel, unit or interest
therein for the purpose of engaging in the business of constructing residential,
commercial, or industrial buildings or for the purpose of resale or lease or
other disposition of such lots to persons engaged in such business or
businesses;
(((f)))
(4) Any lot, parcel, unit or interest if the development is located
within an area incorporated prior to January 1, 1974;
(((g)))
(5) Pursuant to court order; ((or
(h))) (6) As cemetery lots or interests((.
(2) 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)))
(7) Offers or dispositions of evidence of indebtedness secured by a
mortgage or deed of trust of real estate;
(((b)))
(8) Offers or dispositions of securities or units of interest issued by
a real estate investment trust regulated under any state or federal statute;
(((c) A
development as to which the director has waived the provisions of this chapter
as provided in RCW 58.19.040;
(d))) (9) Offers or dispositions of securities
currently registered with the ((business and professions administration in
the)) department of licensing; or
(((e)))
(10) 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.
Sec. 4. Section 5, chapter 12, Laws of 1973 1st ex. sess. and RCW 58.19.050 are each amended to read as follows:
Unless the
development or the transaction is exempt by RCW 58.19.030((:
(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)), a contract or agreement for the purchase of an
interest in a development, whether located in or out of this state,
where the current 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. A purchaser may revoke such contract or agreement
within forty-eight hours, where ((he has received)) the public offering
statement is provided to the purchaser less than forty-eight hours
before ((he signed)) execution of the contract or agreement, and
the contract or agreement shall so provide. Notice of revocation shall be
made by written notice delivered to the seller or ((his)) the
seller's agent. The time period of forty-eight hours shall not include all
or any portion of a Saturday, Sunday, or legal holiday.
Sec. 5. 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, shall be on a form prescribed by rules and
regulations adopted by the director and)) provided to purchasers
shall include the following:
(1) The name and principal address of the developer;
(2) A general description of the development stating the total number of lots, parcels, units, or interests in the offering;
(3) The significant terms of any encumbrances, easements, liens, and restrictions, including zoning and other regulations affecting the development and each unit or lot, and a statement of all existing taxes and existing or proposed special taxes or assessments which affect the development;
(4) A statement of the use for which the property is offered;
(5) Information concerning all existing and promised improvements, including, but not exclusive of other improvements, 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 which might affect a purchaser's interests;
(7) A statement that the developer has or has not complied with all local health and planning governmental requirements;
(8) A statement setting forth all material terms and conditions of any common improvement or facility in which the purchaser will have an interest, including the identification of all management or governing documents; and
(9) Additional
information required ((by the director)) to assure full and fair
disclosure to prospective purchasers of all material factors relating to the
development or the offering.
Sec. 6. Section 12, chapter 12, Laws of 1973 1st ex. sess. and RCW 58.19.120 are each amended to read as follows:
The
developer shall immediately ((report to the director)) amend the
public offering statement to include any material changes ((in the
information contained in his application for registration)) affecting
the development. No change in the substance of the promotional plan or
plan of disposition or completion of the development may be made ((after
registration without notifying the director and)) without first
making an appropriate amendment of the public offering statement. A
public offering statement is not current unless it incorporates all amendments.
Sec. 7. Section 13, chapter 12, Laws of 1973 1st ex. sess. and RCW 58.19.130 are each amended to read as follows:
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)).
Sec. 8. Section 14, chapter 12, Laws of 1973 1st ex. sess. and RCW 58.19.140 are each amended to read as follows:
The public
offering statement shall not be used for any promotional purposes((. It may
not be distributed to prospective purchasers before registration of the
development)) and may be distributed ((afterwards only when it is))
or used only in its entirety. ((No person may advertise or
represent that the state of Washington or the director, the department, or any
employee thereof approves or recommends the development or disposition thereof.))
Sec. 9. Section 17, chapter 12, Laws of 1973 1st ex. sess. and RCW 58.19.170 are each amended to read as follows:
A copy of the public offering statement 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 as a prospective purchaser whether or not such person agrees to purchase.
Sec. 10. Section 18, chapter 12, Laws of 1973 1st ex. sess. and RCW 58.19.180 are each amended to read as follows:
It shall be unlawful for the developer to make a sale of lots or parcels 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 the legal title, or other interest contracted for, free and clear of the lien of such blanket encumbrance upon compliance with the terms and conditions of the purchase agreement, unless the developer shall elect and comply with one of the following alternative conditions:
(1) The
developer shall deposit earnest moneys and all subsequent payments on the
obligation in ((an)) a neutral 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)) until such time as all payments on the obligation
have been made and clear title is delivered, or any of the following occurs:
(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.))
Sec. 11. 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)) which 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. 12. A new section is added to chapter 58.19 RCW to read as follows:
If a developer, or any other person subject to this chapter, fails to comply with any provision of this chapter, any person or class of persons adversely affected by the failure to comply may seek appropriate relief through an action for damages or an injunctive court order. The court, in an appropriate case, may award attorneys' fees.
Sec. 13. Section 27, chapter 12, Laws of 1973 1st ex. sess. and RCW 58.19.270 are each amended to read as follows:
(1) The commission by any person of an act or practice prohibited by this chapter is hereby declared to be an unfair act or practice or unfair method of competition in the conduct of trade or commerce for the purpose of the application of the Consumer Protection Act, chapter 19.86 RCW, as now or hereafter amended.
(2) ((The
director may refer such)) Evidence ((as may be available to him))
concerning violations of this chapter ((or of any rule or regulation adopted
hereunder)) may be referred to the attorney general or the prosecuting
attorney of the county wherein the alleged violation arose, who may, in their
discretion, with or without such a reference, in addition to any other action
they might commence, bring an action in the name of the state against any
person to restrain and prevent the doing of any act or practice prohibited by
this chapter: PROVIDED, That this chapter shall be considered in conjunction
with chapters 9.04 and 19.86 RCW, as now or hereafter amended, and the powers
and duties of the attorney general and the prosecuting attorney as they may
appear in the aforementioned chapters, shall apply against all persons subject
to this chapter.
Sec. 14. 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 forthwith take all steps necessary to notify)) 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.
Sec. 15. 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)).
NEW SECTION. Sec. 16. 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 6, chapter 12, Laws of 1973 1st ex. sess. and RCW 58.19.060;
(3) Section 8, chapter 12, Laws of 1973 1st ex. sess. and RCW 58.19.080;
(4) Section 9, chapter 12, Laws of 1973 1st ex. sess. and RCW 58.19.090;
(5) Section 10, chapter 12, Laws of 1973 1st ex. sess. and RCW 58.19.100;
(6) Section 11, chapter 12, Laws of 1973 1st ex. sess. and RCW 58.19.110;
(7) Section 15, chapter 12, Laws of 1973 1st ex. sess. and RCW 58.19.150;
(8) Section 16, chapter 12, Laws of 1973 1st ex. sess. and RCW 58.19.160;
(9) Section 20, chapter 12, Laws of 1973 1st ex. sess. and RCW 58.19.200;
(10) Section 21, chapter 12, Laws of 1973 1st ex. sess. and RCW 58.19.210;
(11) Section 22, chapter 12, Laws of 1973 1st ex. sess. and RCW 58.19.220;
(12) Section 23, chapter 12, Laws of 1973 1st ex. sess. and RCW 58.19.230;
(13) Section 24, chapter 12, Laws of 1973 1st ex. sess. and RCW 58.19.240;
(14) Section 25, chapter 12, Laws of 1973 1st ex. sess. and RCW 58.19.250;
(15) Section 26, chapter 12, Laws of 1973 1st ex. sess. and RCW 58.19.260;
(16) Section 29, chapter 12, Laws of 1973 1st ex. sess. and RCW 58.19.290;
(17) Section 31, chapter 12, Laws of 1973 1st ex. sess. and RCW 58.19.900;
(18) Section 32, chapter 12, Laws of 1973 1st ex. sess. and RCW 58.19.910; and
(19) Section 34, chapter 12, Laws of 1973 1st ex. sess. and RCW 58.19.930.
NEW SECTION. Sec. 17. If any provision of this act or its application to any person or circumstance is held invalid, the remainder of the act or the application of the provision to other persons or circumstances is not affected.