As you all know, when you have a project with an existing Deed of Trust, the Department of Real Estate requires that the existing loan be made subordinate to the CC&Rs.  This is accomplished through recording a “Subordination” or “Consent of the Lien Holder”, which effectively allows the CC&RS to “jump ahead” of the CC&Rs in priority of title. Do you know why the DRE requires this a...
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By in DRE, HOAs, Home Building, Regulations

The construction loan is recorded and construction is well underway. The DRE process is clicking along, and you just found out you need to negotiate with the Lender... Again. In an effort to fulfill their mission of consumer protection, the Department of Real Estate requires that certain documents be protected against any possibility of a loan foreclosure. In other words, certain documents that...
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By in DRE, Home Building, Regulations

We often work with our clients to create a successful phasing program, being careful to annex common areas at the right time, allowing us to avoid spikes in HOA dues. Being able to plan for the eventual addition of specific common improvements to the HOA helps to avoid “front loading” the association with heavy improvements in the early phases, necessitating a developer subsidy -resulting in even ...
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By in Budgeting, HOAs, Phasing Predictor
Plans

As HOA Start-up Budgets are being created, a question we hear often is "can the dues be reduced?" More often than not, the HOA dues in the early phases are higher simply because of the way the development has been mapped. One big item that impacts the HOA dues in the early phases is quite simply that the common area lots are too large.  Unfortunately, this is something that should be addressed ...
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By in Budgeting, DRE, HOAs
Do's and don'ts

One question we are asked from time to time, is whether or not a client should record CC&Rs  (Covenants, Conditions & Restrictions) on their project.  The answer is often also a question:  Does the local agency require that CC&Rs be recorded?  Depending upon the type of community being created, it may be that no CC&Rs are required at all. The Department of Real Estate’s Glossary...
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By in Budgeting, DRE, HOAs
Stack of coins

Not all lots or units are created equal.  Sometimes the range of differences is based on square footage, location, or certain amenities like ADUs or outside patios.  Other times it may be simply that certain groups are designated as “affordable,” which requires a lower dues assessment level. If the difference is due to size, determining the variance is a function of calculating the unit sizes o...
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By in Budgeting, HOAs, Home Building
Available Sign

The Department of Real Estate oversees the marketing and sales of subdivided lands, which is generally defined as developments consisting of five (5) or more lots or units, for sale to members of the public.  With their mission to provide consumer protection to California homebuyers, the DRE review investigates subdivision offerings to prevent fraud and misrepresentation in subdivision sales. D...
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By in DRE, Home Building, Processing
Bulk photo

The success of the Costco chain of stores has proven that buying in bulk makes sense to a lot of us. From retail sales to real estate, the bulk purchase concept is logically sound. Builders who negotiate a purchase of all or a portion of a subdivision may find that the bulk sale is beneficial, allowing for a better purchase price, among other things. We see these types of transactions more and ...
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By in DRE, Home Building
scissors photo

When an HOA is created, the assessments are triggered when the first lot or unit is sold.  For planning purposes, it’s important to note that the DRE Regulations allow for HOA assessments to be waived for HOA-maintained improvements that are not complete. In a nutshell, Regulation 2792.16c stipulates that any assessments for costs or expenses for common area which has not been completed can be def...
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By in DRE, Regulations
What's Next icon

After the Final Public Report is issued, and the master documents are disbursed, the DRE file here at CBS is suspended, in case any issues or questions arise after the fact.  Many of the common questions are, “what happens after sales close?” When the first sale closes in a common interest development, the HOA springs to life. Assessments are due for collection on the first day of the followi...
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By in DRE, Home Building