What's the Point of the Public Report? - SF New Condos:
What’s the Point of the Public Report?
A “public report” is a document issued by the California Department of Real Estate, and its delivery to the buyer is required in the sale of any new home by the developer to a buyer in a subdivision of five or more units. Below is a sample cover page of a public report, in this case for the Millwheel condos in San Francisco’s dogpatch neighborhood.
The public report is an important document. It is also written and formatted in such a way that buyers rarely read the entire document, which pretty much defeats the point of a public report, IMHO.
The point of a public report is to provide the potential buyer with important information about the common interest development (in San Francisco, that generally means condominium building, although TIC projects of five or more units also require them). The first paragraph of a typical public report points to all that is wrong with the document:
As you can read for yourself, the first paragraph is incredibly wordy, legalistic, and quite frankly, doesn’t encourage you to keep reading. The final paragraph of this page makes reference to an informational brochure about common interest developments that you can – drum roll, please – request a copy of by mail! To save you the postage (and time), I’ve uploaded it to this site, and if you’d like, feel free to download Living in a California Common Interest Development.
If you manage to make it through page 2, you’ll arrive at page 3, in which some unknown-but-angry bureaucrat spends most of the page YELLING AT YOU IN ALL CAPS – because there isn’t any better way to make sure you stop reading?
There’s some important information on page 3: the number of homes in the subdivision, but the layout and format is so un-inviting that most buyers, in my experience, stop reading the public report about here. Paragraph 2 tells you about all the REALLY IMPORTANT THINGS YOU SHOULD READ IN THIS DOCUMENT and is followed by a paragraph that says that in addition to all the REALLY IMPORTANT things you should read, the entire document is important and you should read and understand it all. Which makes me wonder if we really need two paragraphs to say, in essence, “The contents of this document are particular to the homes at 1301 Indiana, and contains information about rules that may affect your enjoyment of the property or its resale value. Please read and review this information carefully.”
Beyond this, the public report actually gets into som valuable information: where the project is, what specific type of subdivision are you purchasing (ie, condominium, planned unit development, tenancy-in-common), what your legal form of ownership will be, how many homes and phases are in the development, what the common interests are (although, seriously, do we really need to list interior paint (garages, lobbies/halls/stairs)?
The next section, “Management and Operation” talks about the governing documents, the initial HOA meeting, the CC&Rs, and the documents the developer will deliver to the buyer. This is all important information delivered, once again, in an incredibly legalistic and unfriendly format. The same can be said for every section that follows, which would include:
- Maintenance and Operational Expenses
- Uses/Zoning/Hazard Disclosures
- Purchase Money Handling
- Soils and Geologic Conditions
- Utilities and Other Services
In addition to the fact that all of the information is delivered in a graphically terrifying format that is filled with five-word-legalese when one word might do the job just as well, much of the information is duplicated by other required disclosures.
The CA public report is important. It’s a shame that it is delivered to buyers in a format that makes it more difficult to understand and digest. Given the budget cuts in California, I doubt it will be receiving a make-over any time soon, but if did, and someone put it on a diet to remove information duplicated by other disclosures, I think every consumer in California would benefit!
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