Section 260.140.114.6 - Development or Construction ContractsThe sponsor will not be permitted to construct or develop properties, or render any services in connection with such development or construction, unless all of the following conditions are satisfied:
(a) The transactions occur at the formation of the program.(b) The specific terms of the development and construction of identifiable properties are ascertainable and fully disclosed in the prospectus.(c) The purchase price to be paid by the program is based upon a firm contract price which in no event can exceed the sum of the cost of the land and the sponsor's cost of construction. For purposes of this subdivision, cost of construction includes the contractor or construction fee customarily paid for services as a general contractor, provided, however, that any overhead of the general contractor is not charged to the program or included in the cost of construction.(d) In the case of construction, the only fees paid to the sponsor in connection with such project, other than a development fee, shall consist of a construction fee for acting as a general contractor, which fees must be comparable and competitive with the fee of unaffiliated persons rendering comparable services (excluding, however, any overhead of the contractor), and a real estate commission in connection with the acquisition of the land, if appropriate under the circumstances. Any such real estate commission shall be subject to the provisions of Section 260.140.113.3 of these Rules.(e) In the case of both development and construction fees paid to the sponsor, the sponsor must comply with paragraphs (d)(2) and (3) of Section 260.140.114.5.Cal. Code Regs. Tit. 10, § 260.140.114.6
1. Amendment filed 1-27-84; effective thirtieth day thereafter (Register 84, No. 4).
2. Amendment of subsections (d) and (e) filed 5-18-92; operative 6-17-92 (Register 92, No. 22). Note: Authority cited: Section 25610, Corporations Code. Reference: Section 25140, Corporations Code.
1. Amendment filed 1-27-84; effective thirtieth day thereafter (Register 84, No. 4).
2. Amendment of subsections (d) and (e) filed 5-18-92; operative 6-17-92 (Register 92, No. 22).