If you are developing a subdivision in the state of California, you’ll need to obtain a subdivision public report before the units in your subdivision can be offered for sale. These reports are used to notify the state of your intent to sell subdivided lands and provide consumers with important information on the units offered within your subdivision.
Not all subdivisions require public reports, and there are a few different kinds of public reports that you can obtain. In this guide, learn what public reports are, why they’re needed, and how to obtain subdivision public reports from the California Department of Real Estate (DRE).
What is a DRE public report?
A DRE public report is a disclosure statement provided to the California DRE that provides detailed information on a proposed subdivision. Subdivision public reports also contain information on the benefits of purchasing real estate within the proposed subdivision, as well as any potential downsides.
DRE public reports must be filed for proposed properties that contain five or more units/lots. Public reports are not required for subdivisions that are developed and operated by public agencies. You are also not required to provide a subdivision public report for commercial or industrial subdivisions; however you do for mixed use projects that have a residential component, such as live-work developments.
As per the Subdivided Lands Law, the California DRE has the mandate to issue public reports and regulate subdivisions. The purpose of this law is to protect consumers from misrepresentation or fraud in the process of selling lots within a subdivision, but subdivision public reports can also be used to advertise a project that a subdivision developer is working on, during the development process.
There are a variety of public reports submitted during the development process, and the conditional or final public report is provided to consumers before they sign binding contracts. Certain information must be included in public reports, and developers are also provided with opportunities to provide additional data that may incentivize consumers to purchase units within their subdivisions.
What information is disclosed in a DRE public report?
All public reports must contain certain information, but it’s up to the state of California to determine if any additional information should be included based on the specific features of the proposed project.
Examples of information that must be included in every public report include:
- The developer’s name
- The size and location of the project
- Map of the subdivision and CC&R information
- How the money used to purchase units within the subdivision is handled
- Conditions of sale, transfer fees, and applicable taxes
- Proposed utility providers, water sources, and sewage information
- School information
- Information on any unusual costs unit owners will have to pay
- Information on easements, setback requirements, or rights of way
- Any specific restrictions placed on the buyer
- Any special permits that may be required based on the features
After an initial assessment, the DRE may determine that further information is required to provide consumers with full awareness of all the features of a proposed subdivision. Developers of subdivisions are encouraged to provide as much information as possible to help consumers understand the benefits and risks of buying units within their subdivisions.
Even if the California Department of Real Estate does not explicitly require particular information, the more that consumers know about a subdivision, the more comfortable they will be with buying that subdivision’s units.
Why is a subdivision public report important in real estate?
Developers that are subject to public reports, including standard subdivisions, must file these reports to sell units and complete the development process. Properly understanding and correctly filing public reports is absolutely essential to the success of developers in California.
While putting together and filing a public report may seem tedious at the outset, consumers aren’t the only parties benefiting from this California real estate development requirement. Providing the DRE with comprehensive public reports can also assist subdivision developers in selling units.
Consumers who don’t know a lot about the features and benefits of lots within a subdivision will likely take their business elsewhere. While filing public reports is required by law, this process also helps maintain the health of the real estate economy by effectively providing free advertising for subdivision developers.
Without public reports, developers would be forced to advertise the benefits of their subdivisions via other means, but the DRE conveniently includes all the relevant information consumers need to make educated buying decisions within published public reports.
What are the different types of public reports?
To offer units to consumers, subdividers must eventually coordinate with the DRE to produce final public reports. Subdividers may also want to obtain a few other types of public reports before and after this process is complete.
Preliminary public report (pink)
Also known as a pink report, a preliminary public report allows a subdivider to advertise the units within a subdivision and reserve units in exchange for refundable deposits. Agreements made between subdividers and consumers based on the content of a pink report are not binding, and preliminary public reports are generally easier to obtain than final public reports.
Conditional public report (yellow)
A conditional public report, also known as a yellow report, allows a subdivider to enter into a binding contract with a consumer regarding the sale of a unit within their subdivision. A yellow report can only remain valid for a maximum of six months. It can then be renewed for another six months. A subdivider cannot close escrows based on a conditional public report until all the conditions required by the DRE are satisfied, and a final public report is issued.
Final public report (white)
All subdividers operating subdivisions within DRE jurisdiction must eventually obtain a final public report, which is also known as a white report. A white report remains valid for five years, and it is required to finalize the sale or lease of a unit within a subdivision.
Amended public report
Suppose a subdivider wants to make changes or additions to a subdivision within the term of their final public report. In that case, they must submit another DRE filing before the sale or lease of any units within the altered subdivision. Called an amended public report, this public report will remain valid for the remainder of the duration allotted by the original final public report.
Renewed public report
A subdivider can request the renewal of a final or amended public report. In most cases, the duration of a renewed public report is five years. If no changes have been made to the subdivision since the issuance of the original final public report, further information is usually not required to obtain a renewed public report.
Interim public report
An interim public report provides the same authority to a subdivider as a preliminary report, but it is issued after a final public report has been obtained. Like preliminary reports, interim public reports are printed on pink paper.
Limited-term public report
A Limited-Term public report is issued by the DRE when all the requirements have been met for issuing a subdivision public report, but the usual 5-year term cannot be granted. Typically this is because a utility supplier’s guarantee of service has an expiration date. Other times, the developer’s selling entity isn’t the owner of the property yet, or only has an option agreement on the subdivision property. A Limited-Term Final Public Report has the same assurances and powers of a normal Final Public Report, but it is issued for less than the normal 5-year term.
What documents do I need to file my public report?
Before any of the units within your subdivision can be offered for sale, you will need to submit a variety of different forms of information to the DRE. Your preliminary DRE filing is unlikely to be accepted on face value. Your chances of success will improve if you do your best to provide exhaustive documentation at the outset. Obtaining a conditional or final public report requires more documentation than obtaining a preliminary report. The process of obtaining a conditional or final public report may require multiple back-and-forths with the DRE.
The most important document you will need to submit during this process is your Notice of Intention (RE 624 or 628, Part III). You will need to provide this document along with a filing fee, address labels, and any additional documentation that may be required. For common interest filings, a duplicate budget package will also be required.
In tandem with your Notice of Intention, you will also need to supply an Index/Quantitative Deficiency Notice (RE 624 or 628, Part II). This document is used to determine whether your application is quantitatively complete, and the DRE will then make a further assessment as to the qualitative completeness of your application. All documentation supplied to the DRE must be provided in physical form, and every page of your documentation must be hole-punched, arranged in numerical order, and tabbed appropriately.
If you need to submit a duplicate budget package, make sure to include the Conditions of Approval required by your local housing agency. Each local department has different Conditions of Approval, so check in with your municipal government before submitting your budget package.
To receive a public report from the DRE, you will need to provide title reports for the subdivision that have been prepared by a qualified title company. Title reports must even be provided to receive a preliminary report.
What are the steps involved in the DRE public report process?
The process of issuing the public report for a subdivision begins when the subdivider or their authorized representative submits a Notice of Intention application to the DRE along with the specified fee. If this minimum filing package (MFP) is deemed to be complete. In that case, a file number is assigned to the application, and the file is reviewed to determine whether it satisfies the requirements of a substantially complete application (SCA).
If the file is not determined to be an SCA, the subdivider is provided with a quantitative deficiency notice. It is then the subdivider’s responsibility to provide the required documents promptly. Once the required documents identified in the quantitative deficiency notice are provided, a DRE deputy may find that even more documentation is needed. They may deliver a qualitative deficiency notice.
At the same time, a deputy determines whether a qualitative deficiency notice is necessary. DRE budget reviewers also review the budget files provided by the subdivider if the proposed subdivision is a common interest filing. If the budget files are determined to not meet the DRE’s specifications, a budget deficiency notice will be issued.
Upon the remediation of any deficiencies found in the documentation, the DRE will ask the subdivider to obtain any necessary bonds and officially record the CC&Rs of the subdivision. Records of these activities must then be provided to the DRE.
Once the documentation by the subdivider or their representative has been deemed “perfected” by the DRE, the process of providing a final public report will be initiated. The subdivider will be provided with the original copy of the final public report for copying and distribution once it is completed.
What are DRE timeframes for public reports?
The amount of time it takes to obtain a public report varies. However, if all goes well, coordinating with the DRE and issuing the public report for a subdivision project could be complete in a matter of weeks.
The DRE must provide a quantitative deficiency notice within 10 days if your minimum filing package is insufficient. If you then receive a qualitative deficiency notice as well, you have 20 days (standard) or 60 days (common interest) to respond. Once the DRE has deemed the submitted documentation to be “perfected,” a final public report must be issued within 10 days for standard subdivisions or 15 days for common interest subdivisions.