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referred to only on a basis of "subject to certain restriction, etc., on file at
and then naming the place. The telephone pitchmen seem to operate by guidelines which might be encapsulated thus: "Say whatever is necessary to make the sale) no more, no less."
The “sales party" or the “anniversary party” (just what anniversary being celebrated is often far from clear) appear to be on the increase as a means of bringing to contract the ones who won't take the bait by mail.
This is an interesting scheme and an ingenious exercise in applied group psychology-sometimes not altogether accidentally approaching induced group hysteria. These “parties” can be nothing short of fascinating to observe.
Though billed as a party, believe me, it's a deadly serious business and anything but an evening of spontaneous revelry.
The format is something like this:
A group of individuals receive by mail (often originating in another State) invitations usually advising that the invitees are a "select group.”
The invitations are for a free dinner, with or without cocktails, and sometimes throw in a door prize.
“Your Golden Future” or some such topic is to be discussed. You “must reply early so that seating arrangements can be made." (If you don't, that man from “WATS” may snap into action to keep you from neglecting your “opportunity.”) In reality, this appears to be so that one of the developer's "consultants” or “counselors” whatever they are—can be seated with each two or three couples. (This is a "couples only” deal.) Incidentally, investigation discloses that these "experts” on the facts about the tract have usually never seen it-merely some material used in their “training”—whatever that may consist of. The guests are dined--perhaps wined.
Then comes the piece-de-resistance—the presentation with films, slides, sound tracks extolling the virtues, detailing the advantages of leverage, warning about the ever-rising prices, etc. Perhaps the big pitch will be by one introduced as a “national speaker.” (The “national” part of it develops, arises out of the fact that, as an employee of the developer, he rides the circuit making his pitch in several States.)
After the merit of the development has been unstintingly revealed, the fortunate are advised that a "choice allotment” of “selected" lots has been set aside for them alone. (The choice is said to have arrived by TWIX.) Incidentally, the "counselors" or "consultants” have been busily pointing out to their tablemates lots on sectional maps which rarely give any idea of just how far they are from any existing road, utility, or human habitation.
Now, so that no anxious buyer can take unfair advantage of the less aggressive value-grabbers, before anyone can go for any of this choice allotment, a novel set of "ground rules" is announced—the cry of “hold” followed by a lot and block number will, if it's accepted by the M.C., secure to that counselor a “hold” for a given number of minutes so that the lucky couple he's interceding for can make up their minds.
In operation, the timing is precise; and if no final decision is reached, anyone else can beat the laggard to the bargain.
Here's where the group “therapy” really begins-as soon as the allotment is declared officially open, several “holds” cries are sure to be heard. Who sought what first is ruled upon and duly recorded. Then the "consulting" and "counseling” begins in earnest. It is really quite a thing to watch.
In New Jersey the detected abuses and, in fact, the admitted flagrant violations of the Real Estate Licenses Act were such as to cause ceaseand-desist action and to bring on promulgation of a requirement that the real estate commission be advised 10 days in advance of each such "party" so that spot monitoring by staff investigators can be done to try to keep them within bounds.
The members of the New Jersey Real Estate Commission, who are (and must be under the law) real estate brokers themselves, have no desire to see the real estate business unduly inhibited; however, we do strongly feel that, as far as practicable, the same reasonable standards of disclosure should apply to interstate land sales as apply to anyone engaging in the real estate brokerage business in New Jersey.
In this light and in view of the unique sight-unseen angles of the interstate promotions, coupled with the delayed-discovery feature, we believe that some Federal legislation must be enacted.
Somehow the buyer-before he buys--should know:
Where the nearest established community is—and something about that community.
What physically open access (if any) there is to individual lots and the conditions of that access (if any).
If roads exist, whether they are in the public domain or whether they are easements—and whose obligation it is to maintain them.
Whether public transportation exists—and something about it.
Whether schools exist—and how far they are from the nearest and most remote offered lot, as well as whether there is tuition payment involved and whether schoolbus service is furnished and on what basis.
Where shopping, and so forth, exists and the nature and scope of that which does exist.
The relative location of the nearest hospital, medical, and dental services, as well as their scope and nature.
Whether there is organized fire protection, as well as its nature and the relative location of its base.
The same information regarding police protection.
Whether water, electricity, and telephone systems serve the offered lots as public utilities.
If public utility extension and system expansion are dependent upon use justification, and subject to utility rules, policies, and charges, the buyer should know that and of whom and where he may inquire for explicit details.
If water is to be drilled for individually, the buyer should have authentic information about the ability of the supply to support the contemplated population which the development can bring to bear on that supply, as well as the individual cost of tapping it.
Human sanitary waste disposal should be similarly dealt with.
Elevation should be given. (Unless I've been misadvised medically, living at high elevation creates real problems for certain ailing and elderly people.)
The character of the area should be revealed; for example, whether it is desert, and so forth.
The nature of the soil and natural vegetation, if any.
Something about local fauna. (Fancy the shock to some city people to find that their only near neighbors are reptiles.).
Which brings to mind a personal experience on a site with a developer who saw me head off to look at a piece of desert vegetation and his instant reaction was, “Good heavens, Commissioner, don't walk over there, that is full of rattlesnakes." This is an area set aside for trailer camping purposes.
Authentic climate-weather data—not means or averages—which mean practically nothing-but highs, lows, dust storm, flood or hurricane data (if these phenomena have occurred) and precipitation, and so forth.
Claimed use potential should be supported by data.
Lot and unit identification data should be revealed. If unit identification, along with road signs and lot stakes exist, one can presumably locate his own lot. If they don't one can find himself in a situation like one “investor” who inquired of a local surveyor and was quoted a five-figure sum as the cost of carrying courses and dimensions for miles through undergrowth in order to tie the “investment” in with established coordinates.
The nature and structure of municipal (or the nearest thing to municipal) government should be made known-particularly to the city dweller accustomed to full-spectrum local government services.
Whether zoning, building code, and health controls exist and by whom enforced.
Tax details including individually held lots imposts (as opposed to plotted but unsold lots held in bulk by the developer) and what these taxes cover. In some jurisdictions, there is proliferation of districts (improvement and other types), each with the power to tax.
The present development and occupancy status should be revealed in understandable terms-particularly how far the offered lots are from any existing improved and occupied areas. Having the nearest house next door is very different from having it 15 miles away—and that has happened within the same development.
Restrictions and reservations, if any, should be made known in such terms that the possible impact can be judged without a trip to the county seat.
If a “transfer privilege” is offered, some idea of the "pool" of close-in (i.e., lots in or near any built-up area) held for that purpose, along with precise, understandable transfer terms and costs.
If a refund deal is offered, the same principle applies.
If any improvement not in existence at the time of contract is promised in the future, the date of installation should be set forth as a firm commitment.
A statement as to whether or not principal payments are held in escrow for the protection of the purchaser. If they are so held, the holder and terms should be stated.
In reviewing S. 2672, I would conclude that whether or not it will accomplish reasonably full disclosure will depend on the nature and content of the prospectus.
I would conclude that the closing sentence of section 8(a) lays an adequate foundation for rules and regulations which would achieve this end and at the same time prevent the prospectus from becoming another "pitch” piece.
Based on our observations and experience in dealing with the interstate land sale problem, we believe this bill to be desirable and necessary legislation.
The members of this commission are active real estate brokers-our experience aggregates 205 years—and we do not see it as impeding clean, decent real estate practice of the type we expect of our licensees in intrastate practice.
The developer who is fairly presenting his promotions should welcome it as a means of curbing some competitors' wild abuses and vastly improving the image of the industry.
We view it as something which could cause us to seek repeal of the out-of-State promotional land section of our statute and to repeal applicable rules and regulations without undermining the protection of the New Jersey citizens.
From the State regulatory agencies' point of view (particularly the “investor” States), even such limited control as they can now exercise is a difficult, time-consuming and frustrating problem; however, we do not urge this legislation as a possible means of lightening our load, but because we think it highly desirable in the public interest.
We can visualize other States considering the course of repealing their applicable statutes, with a consequent possible/probable reduction in the wide variety of regulatory philosophies and devices now prevailing. This, in itself, should be appealing to any developer trying to cope with the present situation, where there are 50 States and practically 50 different situations.
It has been suggested that I report the results of a recent member opinion and factual survey conducted within the National Association of Real Estate License Law Officials—NARELLO for brevity.
For the record, NARELLO is an organization of people involved in real estate licensing and regulation in the 50 States of the United States and 4 Provinces in Canada.
Its basic objectives might be described as upgrading of the standards of practice and the exchange of information in the interest of sound regulation in the public interest.
Senator WILLIAMS. Mr. Van Horn, the bells are ringing for rollcall vote. Senator Mondale and I have to go over.
I know you
have a time problem. Could we include the rest of your statement in the record ?
Mr. VAN HORN. Please do.
Senator WILLIAMS. It has been most helpful. I will say that you speak not only from your experience as commissioner of real estate in New Jersey but you have traveled many States on exploratory field trips to look at some of the land that is being offered. You have gone as far as Hawaii, I believe.
Mr. Van HORN. That is correct.
Senator WILLIAMS. You mentioned something about jungles and lava beds that are part of interstate land sales and this is the informa
tion we got from you. We commend you for your dedication to fairness and equity in the sale of land, be it in New Jersey or in the channels of interstate commerce. We are very grateful.
We have certain uniform laws accepted by most of the States, for example, in areas of commerce and Senator Mondale knows more about this than I do. Is there any likelihood that there could be a uniform code adopted by the States?
Mr. Van HORN. We see very scant likelihood of that, Senator.
Senator MONDALE. Do I understand that this national association of real estate law licensing officials are not taking an official position ?
Mr. Van Horn. That is correct, sir; by virtue of their structure they cannot take an official position on it.
Senator MONDALE. It is my impression that a year or two ago they did favor some sort of interstate regulations?
Mr. Van Horn. I think what came forth as a majority opinion was given as an official position or the organization's position. I respectfully submit and I find agreement among NARELLO membership that they can't have such a thing as an official position.
Senator MONDALE. What does this say about the prospects for dynamic acts at the State level?
Mr. Van HORN. I suggested before that I didn't think it was apt to happen.
Senator MONDALE. The national president of that organization from Minnesota, a very fine man, he helped us in the adoption of our State law.
Mr. Van HORN. I am privileged to know him.
Senator MONDALE. Even if his organization can't take a position, he wants this bill passed.
Mr. Van Horn. May I say without holding you, I am attracted to your fair comment, your interpretive fair comment thought.
Senator MONDALE. I gather that the New Jersey law, from what you say, permits you to editorialize a little bit.
Mr. VAN HORN. It does, indeed; to the considerable chargrin of some developers.
Membership is limited to those actively engaged in this regulatory field-members of real estate commissions (or similarly functioning agencies), commissioners and administrative personnel.
The survey was conducted by the organization's legal and professional conduct committee successor to the rackets committee which has historically been much concerned with interstate land sale practices and has expended considerable effort in the attempt to bring this situation into focus and under control.
The survey was done by questionnaires probing this and other matters of interest to NAREĽLO's members.
High spots on the interstate land sale subject are:
In response to a question concerning the existence of State regulations:
Sixteen responded, "Have no statutes, other than the usual criminal statutes on fraud.”
Among those reporting any other form or measure of control:
Eleven responded, "Have a law requiring subdividers to meet affirmative standards set by our State (for sufficiency, adequacy, or reasonableness of the terms and improvements).