Practices: Common Interest Development

Luce Forward’s Common Interest Development team is the largest of its kind in California. With more than 10 attorneys and a team of paralegals in San Francisco, Los Angeles, Orange County and San Diego, specializing in all aspects of residential, mixed-use, commercial, and industrial projects, we are able to provide our clients with the legal advice and documentation to meet every need arising during the development and sales process. From small standard subdivisions, to 12,000-unit master-planned developments; to mixed-use hotel, retail, commercial, and residential high-rise projects; we have the experience needed to assist our clients with every stage of the development process. Because we have such a large team of attorneys and paralegals we can work on short time frames and on multiple projects, but we are also able to efficiently and cost effectively represent clients on real estate development projects.

Innovative Approaches.

Our team has developed innovative new approaches for common interest developments. For example, in connection with its representation of the master-planned communities at Otay Ranch, Luce Forward developed the concept of an incremental budget which is now routinely used by major master-planned communities in order to phase their communities. Luce Forward established the first environmental association to deal exclusively with properties facing environmental challenges. Recently, we have worked with the Department of Real Estate to obtain approval of an “unoccupied unit” budget to reduce assessment to the developer for unsold units in a down market. In several mixed-use projects, we have worked closely with the Department of Real Estate to obtain waivers of many of the DRE regulatory requirements to facilitate the approval process. These are just a few of the examples of the creativity and ability of Luce Forward to develop approaches to benefit its clients.

Customized Client Solutions.

We approach each project and each client individually. While it may be possible to develop generic documents that get a development from the planning stages to be ready for sale, our view is that this provides little useful information to the buyers, no protection to the developer and creates an atmosphere that is ripe for litigation. We have templates to be used as a starting point, but not as the end result. We have experience with a wide range of projects to use as models for the next project. Tailoring those models and templates to fit the features of your project, the philosophy of your company and the experience of your personnel is the key to a successful project.

We create consistent programs, with emphasis on risk management, to take projects from mapping to construction to sales including:

Project Development and Governance.

• Assist clients to analyze alternative approaches to subdivide and govern complex mixed-use projects and condominiums, master-planned communities and residential properties.
• Assist clients to obtain and implement land use entitlements and negotiate with city, county and other governmental agencies.
• Develop documentation for master plan governance structures for urban town centers and public/private development ventures.

Project Formation Documentation.

• Prepare basic governing documents including CC&Rs, articles of incorporation, bylaws, deeds, and project handbooks (Rules, Architectural Guidelines and Election Rules).
• Review of budgets and condo plans for consistency with other governing documents.
• Prepare subsidy agreements, use agreements and maintenance agreements.
• Negotiate and prepare various shared-use agreements, including easements, cost sharing agreements, and parking agreements.

Construction.

• Review and analysis of insurance proposals for construction liabilities, including wrap insurance programs.
• Prepare or adapt subcontract agreements.
• Negotiate and prepare construction contracts.
• Negotiate and prepare cost sharing agreements.

DRE Approval (Residential and Mixed-Use Including Residential).

Assist in obtaining Department of Real Estate approval, made more efficient by the use of our Master Management Documents which have received pre-approval from the California Department of Real Estate.

Preparation of Complete Sales Package.

• Prepare or adapt Form Purchase Agreement for project use including all necessary addenda.
• Work with development team to prepare project-specific disclosure programs, checklists and templates for disclosures, including surrounding uses, project specific information and environmental disclosures.
• Prepare warranty programs and coordinate with owner and association maintenance manuals.

Association Formation and Turnover Process.

• Assist with the incorporation process, filings with the Secretary of State, filings with the State Franchise Tax Board and initial actions of developer-controlled association.
• Review and negotiate property management agreements.
• Prepare checklists and document retention programs for turnover of property to the association.
• Review of initial insurance proposals for associations for consistency with governing documents.
• Prepare initial Board resolutions and assignment of contracts to association.

Distressed Common Interest Developments.

During the current real estate market downturn, Luce Forward’s Common Interest Development Team is using its expertise to assist lenders, bulk purchasers and developers with a variety of issues involving common interest developments. From dealing with restructuring current projects to make them more economically viable, to addressing issues of substantial delinquencies within owners associations, and working with the Department of Real Estate to obtain approvals to allow for modified sales programs or to permit new sellers to sell residential communities to bulk purchasers or individual buyers, our team is prepared to provide advice and assistance. As leading experts in the field of common interest developments, we are able to provide quick and efficient document reviews of projects we were not originally involved in and assist the parties in spotting issues and structuring transactions or analyzing issues in the pre- or post-foreclosure context. We are able to assist new sellers of existing distressed projects in developing sales programs which are appropriate to the circumstances, including compliance with state and federal laws. In the area of risk management, we can advise on existing insurance and dispute resolution programs to determine if they are appropriate to the distressed project. We are also able to evaluate construction defect or other liabilities for parties such as lenders, who did not originally construct the project. Several of our counsel have in-depth experience representing lenders as well, which provides a deeper understanding of the finance-related issues involved with distressed projects.

Related Services.

• Leasing and sales of commercial, retail and office units.
• Review advertising programs and websites for regulatory compliance.
• Negotiate affordable housing agreements, bond financing and low-income housing tax credit projects.
• Advise on Interstate Land Sales Act, RESPA, FNMA compliance, and FHA/VA compliance.
• Advise on options for SB800/Right to Repair Statute compliance.
• Prepare and assist with obtaining approval of statewide purchase agreement forms.
• Provide advice and training for liability avoidance.
• Develop in-house or other training programs regarding development, advertising, marketing, sales, and handling buyer defaults.
• Prepare complete merchant builder programs for master planned communities.

Through our long history of working on projects in California, Luce Forward has developed and continues to retain an excellent relationship with the current and past Real Estate Commissioners, together with other members of senior management and deputies at the Department of Real Estate. Luce Forward has also been and remains an active participant, including playing a leadership role within the building industry, both at the state and local level. The trust and confidence which the Department of Real Estate and the Building Industry Association have placed in Luce Forward is evidenced by the following positions which members of our group have held in the past or currently hold:

• California Building Industry Association, DRE Committee Chairperson.
• General Counsel – Building Industry Association, San Diego County.
• Chair Home Builders Association DRE Committee Northern California.
• Appointment by California Building Industry Association to the California Building Association Urban Council.
• Appointment by San Diego Building Association to the San Diego Building Industry Association Urban Council.
• Chairperson - California Building Industry - DRE Committee Task Force to Develop Alternative Dispute Resolution Provisions.
• Appointment by the DRE to chair committee which developed the master-planned community regulations for the State of California.
• Appointment by the DRE to a task force committee to develop regulations for Cost Centers.
• Appointment by the DRE to the Condominium Conversion Task Force Committee.

Luce Forward’s Common Interest Development Team has the breadth of expertise to efficiently and creatively assist with almost every aspect of the development process.