PLEASE SUPPORT SB 1100,
AAC Offers to Purchase Subdivision Lots
(File #59 and Senate Amendment “A” – LCO 7893) (House Cal. # 666)
· The bill and amendment allows efficient marketing to begin upon conditional subdivision approval.
· It is pro buyer in an increasing tight home buying market. It allows buyers to get into a new subdivision when they see it coming online.
· And consumers are fully protected by delaying the closing (transfer of title) until after final subdivision approval, in the very rare case that a condition of approval changes between conditional and final approval.
· The Senate amendment (LCO 7893) cleans up the bill to better express its intent and to ensure consumers are protected. The prohibition in the amendment applies to the transfer of title (i.e., the closing of the sale) but would allow marketing, advertising and the sales process prior to a closing to proceed upon conditional approval. It also explicitly protects buyers by letting them rescind these conditional sales contracts if anything unacceptable changes between conditional and final approval and prohibits marketing prior to conditional subdivision approval.
PLEASE SUPPORT SB 1100!
Background: Current Law and Why This Bill is Necessary
Current law prohibits the marketing or sale of subdivision lots until final subdivision approval. Final approval is a pro forma step when the planning commission chairman signs the plat and the plat is filed on the land records. But, the conditional subdivision approval by the planning commission is effectively the most significant approval that triggers interest by consumers.
Final subdivision approval typically comes 3-5 months after the planning commission grants conditional subdivision approval. After conditional approval is granted, as the name implies, conditions must be met by the subdivider to make the subdivision ready to be filed on the land records. These conditions are typically paperwork items, such as doing the legal work to formally dedicate required open space to the town, having the engineer make notations on the plat that will be filed on the land records, posting required performance bonds, etc.
When conditional approval is granted, buyers want to begin locking in their preferred lots or otherwise begin talking with the developer to get into the new development. But current law prevents this by imposing a fine on the developer for selling or offering to sell subdivision lots. This has been interpreted to include a prohibition on marketing, advertising, talking with buyers, or even placing a sign on the property noting the new subdivision. The prohibition on sales and the way it’s been interpreted should be clarified to apply to only the closing of a sale (i.e., transfer of title), when the deed to a lot and funds are exchanged.