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R 338.3456. Officers to issue subpoenas and institute discovery.

Rule 256. (1) The following officers of the department are designated to

subpoena witnesses, issue subpoenas duces tecum, and institute discovery proceedings, in accordance with Michigan general court rules in any investigation

or proceeding under the act:

(a) Director of the department.

(b) Director, land sales division.

(c) Assistant director, land sales division.

(2) Nothing in this rule shall be construed to abrogate the authority of a

presiding officer prescribed in the administrative procedures act of 1969, as amended.

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Rule 261. (1) The department may reject an application for advertising

approval or a statement of record, including a property report, for a subdivision

if the developer fails to comply with the act or these rules or the department's

requirements thereunder. Before entering an order of rejection, the department

shall notify the developer by certified mail of its decision in a notice of

intent to reject for deficiencies. This notice shall toll the running of the

60 day period if the developer shall undertake to correct the deficiencies.

(2) The final decision shall be by further order.

(3) An order of rejection shall automatically be entered after 15 days following the date of mailing of the notice of intent to reject unless the developer

corrects the deficiencies to the department's satisfaction within that time or the

department extends the time to correct to a day certain.

R 338.3463. Hearings; notices and conduct.

Rule 263. (1) Parties shall be notified of a hearing by certified mail at their last known address, which shall be sent not less than 20 days before the

date of the hearing.

(2) A hearing shall be open to the public and shall be conducted in accordance with the administrative procedures act of 1969, being act 306 of the Public Acts of 1969, as amended, and sections 24.201 to 24.315 of the Michigan Compiled

Lans.

(3! A hearing shall be conducted by a presiding officer who shall be appointed by the director of the land sales division of the department. The decision of such director shall be the final decision.

R 338.3464. Hearings; appearances, pleadings.

Rule 264. (1) A party may appear at a hearing in person or by a duly

authorized representative or attorney.

(2) If a party fails to appear after proper service of notice, the director of the land sales division, if no adjournment is granted, may proceed with the hearing and make his decision in the absence of such parties.

(3) An adjournment or continuance may be granted by the director of the land sales division or the person he designates for good cause shown by a party

to the hearing or on his own motion or after stipulation and agreement between

all parties, but a request for adjournment shall be made in writing not less than 5 days before the date set for the hearing.

(4) A party may file a written answer to charges or claims made or may

present an oral statement at the time of the hearing. Copies of written pleadings

and briefs shall be served on the director of the land sales

ivision and all

other parties not less than 5 days before the date set for t.

itaring.

R 338.3465. Hearings; evidence.

Rule 265. (1) Testimony shall be under oath or affirmation.

(2) A deposition shall be taken only on order of the director of the land sales division upon a showing that it is impracticable or impossible to obtain

necessary evidence otherwise. It shall be taken in accordance with provisions for taking depositions in civil cases, as set forth in the Michigan general court rules or other applicable court rules.

R 338.3466. Decisions, orders, and rehearings.

Rule 266. (1! Within a reasonable time after completion of a hearing, the director of the land sales division shall send by certified mail to the last known address of the parties the decision and orders which shall include

findings of fact and conclusions of law.

(2) A rehearing may be granted by said director upon application in writing by a party to the hearing or upon his own motion in accordance with the administrative procedures act of 1969, as amended. A rehearing shall be

noticed and conducted in the same manner as an original hearing.

Mr. GONZALEZ. We have Herman J. Smith, vice president of the National Association of Home Builders; David D. Roberts, the vice chairman of the legislative committee of the National Association of Realtors, who is accompanied by our good friend Albert Abrahams, who is a vice president for governmental affairs; and we have J. B. Belin, Jr., president of the American Land Development Association.

Gentlemen, we are confronted with a factor here on the continued use of this hearing room. We will have access to it for about an hour, and then we will have to vacate it.

We are very grateful, because each of you has perfected a very fine written statement. We are going to suggest that, for the time that we conduct this as a panel, and if you would be kind enough to summarize your statements to help keep us within the period allotted to use this room, and of course to have a chance to ask questions, I would be very grateful.

Perhaps we could start with Mr. Belin.

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STATEMENT OF J. B. BELIN, JR., PRESIDENT, CHAIRMAN OF THE

BOARD, AMERICAN LAND DEVELOPMENT ASSOCIATION; ACCOMPANIED BY GARY A. TERRY, EXECUTIVE VICE PRESIDENT, WILLIAM B. INGERSOLL, GENERAL COUNSEL, AND GEORGE G. POTTS, DIRECTOR OF PUBLIC AFFAIRS

Mr. BELIN. Thank you, Mr. Chairman.

Mr. Chairman and members of the subcommittee, my name is Bruce Belin. I am president and owner of Belin & Associates of Houston, Tex., a real estate development company currently developing five recreational, resort, and residential projects in Texas, including the award-winning April Sound near Houston. I am presently serving as president and chairman of the board of the American Land Development Association.

Accompanying me today are Gary A. Terry, our association's executive vice president; William B. Ingersoll, general counsel; and George G. Potts, director of public affairs. Our association represents leading national and international companies which develop recreational, resort, and residential real estate.

In the interest of time, Mr. Chairman, I will not read our printed statement in its entirety, but I do request that the complete text and exhibits be included in the hearing record.

It is not our intention to hamper OILSR's efforts to help buyers inform themselves and to protect themselves from the irresponsible element which exists in real estate as, unfortunately, in every other business. But we do not believe such protection has to be at the expense of the honest, responsible developers who predominate in our industry. We therefore are compelled to speak out against what we consider are perhaps well intended, but nevertheless overly restrictive attempts to legislate even more regulation of our ir:dustry.

H.R. 12574, introduced originally as H.R. 10999, would amend the act substantially, adding more regulation. In our opinion, this bill would do considerable harm to developers-indeed, perhaps forcing many of them out of business altogether—while not producing the desired result of greater buyer protection.

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One of the major provisions of the bill would give all purchasers and lessees an "unconditional 30-day rescission period" from the date of the consummation of the sales transaction.

Apparently, the purpose of this provision is to allow a buyer a period to reflect objectively on the correctness of his purchase. However, we strongly feel that the present 72-hour, 3-business-day requirement provides adequate and reasonable protection to any purchasers who might have acted on impulse.

While a number of States have rescission periods exceeding the present 3-day Federal requirement--for example, New Jersey is 7 days, New York is 10 days, California is 14 days—many of our member companies operating in those States maintain that such lengthy rescission periods do little more than encourage purchaser irresponsibility and permit overzealous sales persons to close sales by reminding the customer that he has "nothing to lose, since you can easily cancel this transaction if you change your mind.”

We must reflect that, in no other type of "arm's length" real estate transaction is there such a rescission period; and it seems grossly unfair to single out one particular industry for such treatment, particularly when it goes beyond what would be necessary for adequate buyer protection.

However, the automatic 30-day rescission period pales when one considers the proposal for a 3-year period of revocation for the buyer given under certain specified conditions. The effect would be that the buyer has a 3-year "option,” but the developer would be contractually bound. And if at any time during that period the buyer changes his mind for any reason-for example, he later decides he would rather have a new boat or a car—the developer must cancel the contract and give a full refund. It seems obvious, Mr. Chairman, that no business could operate under these conditions.

In short, ALDA believes such provisions allowing for 30-day and 3-year rescission periods are unreasonable, unnecessary, and would place an unconscionable burden upon the developer.

Another provision of the proposed bill would mandate that the "statement of record" contain copies of all advertising used by the developer, giving HUD specific statutory authority to regulate advertising

Any such regulation of advertising which requires prior submission or approval from OILSR would be a bureaucratic nightmare, and would cripple the developer's ability to make timely changes to take advantage of market nuances.

OILSR already has advertising guidelines as part of its land sales regulations which serve to put the developer on notice as to what is expected in advertising.

The final provision of H.R. 12574 upon which I would like to comment is that dealing with the escrowing of moneys for so-called "basic services” promised but not completed, and the option granted the purchaser to void his contract and receive full refund if these services are not delivered.

The problem these proposals are designed to correct seems obvious. Their objective is the right one—to require the developer to perform his part of the contract. However, while on the surface this might seem to provide significant protection to the purchaser, in reality it can be harmful to him.

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