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know that the delay that would be involved would seriously hold back my people in the development of other areas.

My people have contributed to the areas that they are in. They enjoy a fine reputation. They go in and they hire these local people, they spend money in the area, and they like to have a feeling that they are well thought of in the area and they use—as a matter of fact, in going into future States—they use the past States that they have been in and quite often get the people in there to give them recommendations.

The first thing you have this delay, and we feel it would be an unreasonable expense, which, of course, would cut down our taxable income. It is going to be an expense to file this prospectus plus a delay, and it is going to hamper us.

Secondly, this is what it is going to do to us. You have the 48-hour cooling off period in here. If we were in there it would seriously affect the ability of our salesmen to sell lots.

Now the average situation here is that a man from Washington will get in his car on a Saturday or a Sunday and drive down to Louisa, which is approximately a 2-hour drive or somewhat less than a hundred miles and he will look at a lot and may be is in a mood to buy it. Under this bill, this man can't buy if he wants to. If he says I want to buy under this bill, if we were under it, he would have to wait 48 hours. Now in that 48-hour period a lot of things could happen.

Senator WILLIAMS. What could happen?

Mr. JEFFREYS. A man could die for one thing and we couldn't make a sale. I was being facetious there, but we feel that if the salesman has the advantage of talking to the man

Senator WILLIAMS. If your product is as high quality as you suggest, I don't think 48 hours is an undue period of delay.

Mr. JEFFREYS. Senator, even though I might go out and be interested in buying a Cadillac, but if I go home and

think about it all weekend or something, maybe I will decide and change my mind. It is just a natural thing.

Senator WILLIAMS. We have protected, you know, talking about Cadillacs, and all of the other automobiles, Congress is legislating consumer protection in the sale of automobiles, even used cars, although there I think there is a little faulty administration.

Senator MONDALE. That is beyond the reach of modern government. Mr. JEFFREYS. Senator, excuse me, do you have a question?

Senator MONDALE. I think there is a problem here. Yesterday the NAREB representatives testified and I asked them if they could volunteer language that would draw a distinction between high type realtor you describe who was playing it straight and has an investment, who is banking on good will and respect of the community, who is in the business for a long time and wants to maintain the kind of high standards that are basic to reliable business and responsible business on the one hand, and these outrageous, indefensible unethical impositions upon our American consumers. Do

you have some language or could you suggest some language that would help us draw that distinction?

Mr. JEFFREYS. I have three suggestions that could possibly protect people like you are describing, and still I think take care if it was necessary. Of course, in the first place I am saying here that I don't really think the bill is necessary, but now let's say you are asking me about the language.

One could be that we only do business, for instance, in contiguous States. We are not interested in going out and selling real estate in Minnesota, people in Florida or all the way across the country. We are doing business in contiguous States, but we are you gentlemen are familiar with the fact that these cities have grown across State lines, there are rivers, boundary lines, and for instance I use as an example, Memphis, Tenn., and the Memphis in Arkansas. Well they are practically one community, and there are a good many other situations like that, even in Washington, D.C., area, you are almost as much in Virginia and Maryland as you are in the District of Columbia, as far as your

closeness. Now if we could have the permission or some way that would be an exclusion, let's say, for people who operate in contiguous States, that is one idea.

Another idea I had

Senator MONDALE. How does that distinction reveal who is ethical and sound and who is not? In other words, we are trying to get some help here to reach these culprits. I don't think you are helping us.

Mr. JEFFREYS. One thought I was going to follow on it with, was personal inspection. Senator, have you given any thought to the personal inspection feature. In other words, if a man goes out and sees the lot—now Senator Williams said in the Congressional Record statement that this bill is primarily aimed at correcting abuses in the mail order land sales industry.

Senator MONDALE. That is a distinction we ought to consider.

Mr. JEFFREYS. Now if a man goes out and personally inspects these premises, then, of course, that is one way that he has looked at it, he has seen it, and you are not selling through the mail.

Senator MONDALE. One problem that I think we have there, at least one that occurs to me, let's


back to Golden Palms that we are helping to advertise at this hearing, the

Senator WILLIAMS. I don't think they will ever sell another acre in Golden Palms.

Senator MONDALE. If that prospective purchaser can get to the site, let's assume he makes it and the salesman shows him the land and it is dry. How is he to know that it is also a flood compound that may have 5 feet of water on it next month?

Mr. JEFFREYS. In dealing with an outfit like the one I represent, naturally they have already had surveys made, and they have a]] kinds of things to show the man, they are ready to show him these things when he goes out there.

Senator MONDALE. I am sure your clients have the highest standards, I am sure they don't want to have anything to do with this kind of proposition, but our problem is not limited to passing judgment on your clients, it is to try to protect the American public from this other performer who unfortunately does not have the standards of

Mr. JEFFREYS. The question is, how far can you go in trying to protect this man in limiting an industry that is in business.

Now my experience, with all due respect to you gentlemen in your efforts to protect the retired people, my experience has been that re

your clients.


tired people are sometimes the most scrutinizing individuals and they go into things with a lot more care, than say doctors and lawyers who are too busy to read things, and usually they are not the kind who are going to be taken in too easily, particularly when they are out there.

I think that you have corrected your main problem when the man has gone out to the site. In other words, you are not selling him anything that he hasn't seen. He sees it and at that point, if we wants to, he can consult local people or ask local people or whatever he wants to do.

My other idea, which I think would go along and contiguous—which you didn't seem to think much of-would be a hundred mile radius or something like that. We only do business within a hundred or 150 mile radius. We don't try to go out and cross the United States and go to Florida. I don't think that many States have this same problem that Florida and Arizona and one other or so States might have.

Senator MONDALE. In other words, you think that where the prospective purchaser has seen or is within a reasonable area, where he can easily and inexpensively commute and see if he wants to buy, that he is protected more fully than the person who buys it sight unseen, several thousand miles away.

Senator MONDALE. That is a very strong point.

Mr. JEFFREYS. And as a part of our advertising along these lines, we will send the man some kind of a check or something that he can fill out when he comes to the property, that American Realty Corp. will pay

his expenses in going out and looking at the property. In other words, the whole attempt is based on getting this man to inspect.

Senator WILLIAMS. I think there is a great deal of logic in what you are saying here, that an individual who goes to the site and can observe is certainly in a better position to make a judgment on whether it is a good buy at the price.

Now you are worried about 48 hours. You know, a man can go to the site and look at the property, and it looks good and the price is right. Well I am telling you this, it will

take him more than 48 hours to get his lawyer and get the lawyer to find out whether it is a flood control district.

Would you tell your people that there was an easement that could destroy their property or affect it in any way in your selling practices ?

Mr. JEFFREYS. It would have to be. If we had some kind of an easement

Senator WILLIAMS. If you would do that, in your present selling brochure, be it over the radio or the telephone or newspapers, I have a feeling that you probably already meet the requirements of this bill.

Senator MONDALE. Moreover, I am sure that his client and this esteemed witness would never buy property and promote it with such a restriction.

Senator WILLIAMs. I will bet you already comply with this bill and all you have to do is file your statement with the SEC.

Mr. JEFFREYS. Except though, we do feel that here there would be a delay. Going through the SEC is a slow procedure, Senator.

Senator WILLIAMS. Well, you can have my pledge of assurance that if the SEC-obviously we are legislative, they are the executive and


administrative branch—but we will be pounding at their doors if there is any unreasonable delay, if this becomes law.

Mr. JEFFREYS. I still think 48-hour delay, for example, if a man said he was a Government worker in Washington and his wife went out say to Louisa, we will use that as an example, and they decided they wanted to buy, usually the procedure is they make some kind of deposit and sign the contract and so on. Then the

Then the paper would later be completed and whatever financing they needed. But if they come back home to wherever they live in Maryland, and both of them have jobs, and they are usually the type of people to buy, they are hard to locate and it is hard to get back in touch with the salesman.

You are putting an undue burden and hardship upon the selling crew.

We are out to sell lots, there isn't any question. We are still trying to sell lots and make money.

Senator WILLIAMS. Well, as a matter of fact, you have described your development of the site procedures. While you are damming up the stream–I might be wrong on this—but let's consider this for the moment—while you are damming that stream that you describe, while you are bringing in your bulldozers, couldn't you then be developing your description of disclosure of what the property is? You don't do this in 48 hours.


Senator WILLIAMS. Gathering the land, damming up the stream, moving in with your bulldozers, is a long development process, right?


Senator WILLIAMs. In this period you describe exactly what you are going to have, how many paved roads, how close you are to utilities, what the water situation is, what the easement potential is, you have a long period here of getting your terms ready. Of course in your submission to the SEC I don't think you have to have the land fully developed. You can tell them what you are going to have, you know what they are going to have

Mr. JEFFREYS. You advertise over radio and television, and a lot of people come out over a weekend, and that is when the selling is done. People like to see other people out there too.

You have to realize all of these selling techniques we have to use which are perfectly legitimate.

Senator WILLIAMS. You could have had your paper work with the SEC done by the time you expected the first person on the land.

Mr. JEFFREYS. According to that list you are going to have to furnish SEC, Senator, and I went over it rather briefly, some of it is not going to be available that soon. You have a lot of material that is going to take some time.

Senator WILLIAMS. What kind of material would be so difficult that would delay you?

Mr. JEFFREYS. Well I noticed in the bill—I don't have a copy here before me—that so much information was going to be required. I can't put my hands on my bill. So much information was going to be required that we couldn't get it together that quickly. It would take some time.

Now information like name and address and legal description, of course, would be simple. But when you get into the business of the

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present condition of access to, now we usually set up a utility company in these developments. In other words, a separate utility company is set up and that is operated later on by the people who actually own lots in this development.

We also set up a property owners association, and every owner is required to be a member of that association. They are requested to be a member of the association. They go ahead and provide for the lake and all of the roads and that kind of thing, to be later on turned over to the people who own this subdivision.

Senator WILLIAMS. That is frosting on the cake. That is something. of benefit beyond what you as subdividers have planned.

I am just talking about your work, not what the ultimate property owners plan for their own community. What we are trying to do is find a way for you to disclose what you are selling. We are not look

a ing at the ultimate, what the property owners will develop. We are talking about undeveloped land in a sense that you are not building buildings, am I right?

Mr. JEFFREYS. That is correct. We don't build any buildings at all, just sell the lots. But Senator, one of my points was that we feel that in the States that we have been in, and I would think most of the States in the United States, they do now have adequate laws and some type of policing. Maybe that is not true. Senator WILLIAMS. Were you here yesterday? Mr. JEFFREYS. I was here. Senator WILLIAMS. Some of of the States are to the contrary.

Mr. JEFFREYS. Ohio has a right good procedure. They require a lot of things that have to be furnished before you can set up a resort development, and I know in my own State of Virginia

Senator WILLIAMS. You know our bill provides that the SEC, where there is adequate State law, can use what the State law requires in terms of disclosure.

Mr. JEFFREYS. Of course my first point in going into this thing, and I want to make it clear, was that this bill we didn't feel was really necessary from an overall picture. I realize there are abuses going on, but we didn't feel those abuses were of widespread enough use to involve or require a bill that would put everybody who is in resort development business under it. I think you are going to penalize a lot of developments and add on expenses, particularly the selling problem, which I think is going to be a problem and I think you are going to put a lot out of business.

Senator WILLIAMS. There are a lot going to be out of business that shouldn't be in business.

Mr. JEFFREYS. I was referring more to the ones that are trying to comply right now.

Senator WILLIAMS. This would not put a reputable organization like yours out of business. As a matter of fact, I would wager anything but money—which we don't have too much of—that this could only help highly reputable organizations like yours. It will be a little burden in the beginning, but ultimately it will dignify the whole business of subdividing land and selling it as undeveloped land.

Mr. JEFFREYS. But you are still trying to get at the mail order idea chiefly.

Senator WILLIAMS. It is not just mail order, that is a figure of speech, but interstate land sales. That is what we are getting at.

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