California Real Estate SalespersonProperty Ownership and Land Use ControlsHard
A developer sells lots in a new subdivision without ever obtaining a Public Report from the California Department of Real Estate as required by the Subdivided Lands Act. What remedy is generally available to a buyer who purchased a lot under these circumstances?
- AThe DRE will complete the transaction on the buyer's behalf
- BThe buyer forfeits any right to the deposit paid
- CThe sale is automatically void and title reverts to the developer
- DThe buyer may rescind the purchase contract within the statutory period
Show answer & explanationAnswer & explanation
Correct answer: D. The buyer may rescind the purchase contract within the statutory period
Under the Subdivided Lands Act, a developer must furnish a Public Report to buyers before selling subdivided lots. If no Public Report was given, the buyer generally has the right to rescind the transaction within a statutory period, and the developer may also face administrative or criminal penalties for the violation.
Why the other options are wrong
- A. The DRE does not step in to complete private real estate transactions.
- B. The buyer does not forfeit the deposit; rescission generally restores the buyer's funds.
- C. The sale is not automatically void; the buyer has the option, not an automatic reversal, to rescind.
Public Report Violation Remedy
If a developer sells subdivided lots without providing the legally required Public Report, the buyer generally has the right to rescind the purchase within a statutory period.
- Public Report required before offering subdivided lots for sale to the public
- Failure to provide it can trigger buyer rescission rights
- Developer may also face DRE enforcement action or penalties
Memory trick: No report, no deal — buyer gets to walk away.