File No. 34204
This rule was published in the November 15, 2010, issue (Vol. 2010, No. 22) of the Utah State Bulletin.
Commerce, Real Estate
Undivided Fractionalized Long-Term Estates
Notice of Proposed Rule
DAR File No.: 34204
Filed: 11/01/2010 03:55:13 PM
Purpose of the rule or reason for the change:
The substantive elements of this rule have been incorporated into the proposed new Rule R162-2f. Therefore, this rule is no longer needed. (DAR NOTE: The proposed new Rule R162-2f is under DAR No. 34191 in this issue, November 15, 2010, of the Bulletin.)
Summary of the rule or change:
The rule is repealed in its entirety.
State statutory or constitutional authorization for this rule:
- Subsection 61-2f-307(1)(b)
Anticipated cost or savings to:
the state budget:
Where the substantive provisions of this rule are incorporated into the proposed new Rule R162-2f, no fiscal impact to the state budget is anticipated from this filing.
Where the substantive provisions of this rule are incorporated into the proposed new Rule R162-2f, no fiscal impact to local governments is anticipated from this filing.
Where the substantive provisions of this rule are incorporated into the proposed new Rule R162-2f, no fiscal impact to small businesses is anticipated from this filing.
persons other than small businesses, businesses, or local governmental entities:
Where the substantive provisions of this rule are incorporated into the proposed new Rule R162-2f, no fiscal impact to affected persons is anticipated from this filing.
Compliance costs for affected persons:
In repealing this rule, the division and commission relieve affected persons of any obligation to comply with it. There are no compliance costs.
Comments by the department head on the fiscal impact the rule may have on businesses:
No fiscal impact to businesses is anticipated from this rule repeal as the substance of these provisions is contained in the new Rule R162-2f proposed by the Division.
Francine A. Giani, Executive Director
The full text of this rule may be inspected, during regular business hours, at the Division of Administrative Rules, or at:Commerce
160 E 300 S
SALT LAKE CITY, UT 84111-2316
Direct questions regarding this rule to:
- Jennie Jonsson at the above address, by phone at 801-530-6706, by FAX at 801-526-4387, or by Internet E-mail at email@example.com
Interested persons may present their views on this rule by submitting written comments to the address above no later than 5:00 p.m. on:
This rule may become effective on:
Deanna Sabey, Director
R162. Commerce, Real Estate.
R162-11. Undivided Fractionalized Long-Term Estates.
R162-11-1. Authority and Definitions. 11.1.1 The following administrative rules are promulgated
under the authority granted by Sections 61-2-5.5 and
11.1.2 Terms used in these rules are defined as
(a) "Affiliate" means an individual or entity
that directly or indirectly through one or more intermediaries
controls or is controlled by, or is under common control with, a
specified individual or entity.
(b) "Entity" means any corporation, limited
liability company, general or limited partnership, company
association, joint venture, business trust, trust, or other
(c) "Sponsor" means the party that is the
seller of an undivided fractionalized long-term estate.
(d) "Undivided fractionalized long-term estate"
is defined as in Section 61-2-2.
R162-11-2. Marketing Disclosures. 11.2.1 All real estate licensees who market an undivided
fractionalized long-term estate shall obtain from the sponsor,
and shall provide to purchasers in the form of written
disclosures provided in a reasonable amount of time in advance of
closing to allow adequate review by the purchaser, the following
22.214.171.124 Information concerning the sponsor and the
(a) The financial strength of the sponsor and all
affiliates, as evidenced by current certified financial
statements and current credit reports, and information concerning
any bankruptcies or civil suits;
(b) Whether any affiliate of the sponsor is a third party
service provider in the transaction, including mortgage brokers,
mortgage lenders, loan originators, title service providers,
attorneys, appraisers, document preparation services, providers
of credit reports, property condition inspectors, settlement
agents, real estate brokers or other marketing agents, insurance
providers, and providers of any other services for which the
investor will be required to pay.
(c) Whether any affiliate of the sponsor is a master
lease tenant or whether the sponsor is an affiliate of any master
(d) Any use that will be made of purchaser
126.96.36.199 Information concerning the real property in
which the undivided fractionalized long-term estate is
(a) Material information concerning any leases or
subleases affecting the real property;
(b) Material information concerning any environmental
issues affecting the real property;
(c) A preliminary title report on the real
(d) If available, financial statements on any tenants for
the life of the entity or the last five years, whichever is
(e) If applicable, rent rolls and operating
(f) If applicable, loan documents;
(g) The Tenants in Common agreement, or any agreement
that forms the substance of the undivided fractionalized
long-term estate, including definition of the undivided
(h) All third party reports acquired by the
(i) A narrative appraisal report, with an effective date
no more than 6 months prior to the date the offer of sale is
made, that includes at minimum pictures, type of construction,
age of building, and site information such as improvements,
parking, cross easements, site and location maps;
(j) All material information concerning the market
conditions for the property class; and
(k) All material information concerning the demographics
of the general market area.
188.8.131.52 Information concerning the asset managers and
the property managers of the real property in which the undivided
fractionalized long-term estate is offered:
(a) Contact information for any existing or recommended
asset managers and property managers;
(b) Any relationship between the asset managers and the
(c) Any relationship between the property managers and
the sponsor; and
(d) Copies of any existing asset management agreements
and any property management agreements.
11.2.2 All real estate licensees who market an undivided
fractionalized long-term estate that is subject to a master lease
shall obtain from the sponsor and provide to purchasers in a
reasonable amount of time in advance of closing to allow adequate
review by the purchaser, financial statements of the master lease
tenant, audited according to generally accepted accounting
principles. If the master lease tenant is an entity formed for
the sole purpose of acting as the master lease tenant, then the
financial statements of the owners of that entity shall be
11.2.3 All real estate licensees who market an undivided
fractionalized long-term estate shall, in a reasonable amount of
time in advance of closing to allow adequate review by the
(a) disclose in writing to purchasers:
(i) that there may be tax consequences for a failure to
close on the purchase;
(ii) that there may be risks involved in the purchase;
(b) shall advise purchasers that they should consult with
tax advisors and other professionals for advice concerning these
R162-11-3. Regulation D Offerings. 11.3 The Division and the Commission shall consider any
offering of a fractionalized undivided long-term estate in real
property that is compliant with Securities and Exchange
Commission Regulation D, Rule 506, 17 C.F.R. Sec. 230.506 to be
in compliance with these rules.
KEY: tenants-in-common interests
Date of Enactment or Last Substantive Amendment: October 19,
Authorizing, and Implemented or Interpreted Law: 61-2-26 ]
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For questions regarding the content or application of this rule, please contact Jennie Jonsson at the above address, by phone at 801-530-6706, by FAX at 801-526-4387, or by Internet E-mail at firstname.lastname@example.org.