3170-0012 ILSA Renewal Supporting Statement A 30-day final

BUREAU OF CONSUMER FINANCIAL PROTECTION
PAPERWORK REDUCTION ACT SUBMISSION
INFORMATION COLLECTION REQUEST
SUPPORTING STATEMENT PART A
INTERSTATE LAND SALES FULL DISCLOSURE ACT
(REGULATIONS J, K & L) 12 CFR 1010, 1011, 1012
(OMB CONTROL NUMBER: 3170-0012)

OMB TERMS OF CLEARANCE:
Not applicable. The Office of Management and Budget (OMB) provided no Terms of
Clearance when they approved this information collection on June 10, 2012.
ABSTRACT:
The Interstate Land Sales Full Disclosure Act (ILSA) requires land developers to
register non-exempt subdivisions with the Bureau of Consumer Financial Protection
(CFPB) before selling any lots, and to provide each lot purchaser with a disclosure
document designated as a property report, 15 U.S.C. 1703-1704. ILSA was enacted in
response to a nation-wide proliferation of developers of unimproved subdivisions who
made elaborate, and often fraudulent, claims about their land to unsuspecting lot
purchasers. Information is submitted to the CFPB to assure compliance with ILSA and
the implementing regulations. The CFPB also investigates developers who are not in
compliance with the regulations.
A. JUSTIFICATION
1. Circumstances Necessitating the Data Collection
The Interstate Land Sales Full Disclosure Act (ILSA) requires land developers to
register subdivisions of 100 or more non-exempt lots or units and to provide each
purchaser with a disclosure document designated as a property report, 15 U.S.C. 17031704. ILSA was enacted in response to a nation-wide proliferation of developers of
unimproved subdivisions who made elaborate and often fraudulent, claims about their
land to unsuspecting lot purchasers. Information is submitted to the Bureau of Consumer
Financial Protection (CFPB) to assure compliance with ILSA and the implementing
regulations. The CFPB also investigates developers who are not in compliance with the
regulations.
The following list provides the relevant section of each statute and regulation
requiring a collection of information:


Registration of Projects – 12 CFR 1010.100 - 1010.219 and 15 U.S.C. 1701
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MSA Exemption Certificate/Affirmation - 12 CFR 1010.13(a)(9) and 15 U.S.C.
1702
Option to Cancel Notification - 12 CFR 1010.15(b)(5)(i) and 15 U.S.C. 1703
Sample Registration Format/ Lot Information and Sample Receipt - 12 CFR
1010.15(b)(11) and 15 U.S.C. 1705
Advisory Opinion Affirmation - 12 CFR 1010.17(b)(3) and 15 U.S.C. 1702
Initial and Consolidated Fee Schedule - 12 CFR 1010.35(b) and 15 U.S.C. 1704
Property Reports Receipts for Lots Sold in Registered Projects – 12 CFR
1010.118 and 15 U.S.C. 1707(a)
Financial Statements (FS) – 12 CFR 1010.212(d) & 12 CFR 1010.112 and 15
U.S.C. 1705
Unconditional Guarantee – 12 CFR 1010.212(g) and 15 U.S.C. 1705
Annual Reports for Registered Projects (AR) – 12 CFR 1010.310 and 15 U.S.C
1705
Exemption Filing (including Multiple Site Exemption Projects) – 12 CFR 1010.15
& 1010.16 and 15 U.S.C. 1702(c)
Lot Information Statement and Property Report Receipts for Multiple Site
Exemption Projects – 12 CFR 1010.15 and 15 U.S.C. 1702(c)
Annual Report for Exempted Projects – 12 CFR 1010.15(d) and 15 U.S.C. 1701
Advertising Disclaimers (AD) – 12 CFR 1011.50(a) and 15 U.S.C. 1703, 1705
Restrictive Covenants – 12 CFR 1010.109(f)(1)(iii) and 15 U.S.C. 1705
Voluntary Suspension Form – 12 CFR 1010.22 and 15 U.S.C. 1702
Disclosure Document Certification - 12 CFR 1010.504(a)(2) and 15 U.S.C. 1708
Property Report Cover Page Language - 12 CFR 1010.558(a)(1) and 15 U.S.C.
1703
Revocation Rights Notification - 12 CFR 1010.559(a)(1) and 15 U.S.C. 1703

In September 2014, President Obama signed into law H.R. 2600, which partially
exempts sales and leases of condominium units from ILSA. The act will be effective six
months after being signed into law (March 2015).1 Therefore, we restrict our burden
estimates to collections related to land sales only.
2. Use of the Information
Respondents are developers (or attorneys or others who work for them). As respondents,
developers must provide information to two parties: government (CFPB) and prospective lot
purchasers.

1

This exemption for condominium units, along with other exemptions, is listed in the statute at 15 U.S.C. 1702.

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The developer must register a subdivision with CFPB and receive an effective date before
any lots from that subdivision can be offered for sale or lease. The registration documents, also
called Initial Statement of Record, include the proposed property report and additional
information and documents that support the developer's disclosures in the property report. The
initial registration also includes a copy of financial statements and a receipt of paid registration
fees. If after the initial registration there are any material changes, developers must submit
amendments to their registrations. In addition, if other lots are added to the existing sub-division,
a developer must submit a consolidated filing.
The developer must also submit an annual financial statement and an annual report on
any initial or consolidated registration not under suspension, prepared in the format required by
Section 1010.310 of the regulations. However, a developer may voluntarily suspend his
registration by submitting a Voluntary Suspension Form, which can be obtained through request
of the CFPB.
Developers must give purchasers a copy of an up to date property report before the
purchaser signs the sales contract. The developer is responsible for ensuring that the registration
is accurate and does not omit information needed for a purchaser to make an informed decision.
Developers are also required to make copies of financial statements readily available.
The CFPB conducts a facial review of the submissions. The developer may request an
Advisory Opinion if a developer has questions about the applicability of one of the exemptions
from registration. A CFPB determination is required only if a developer claims an exemption
from registration under the multiple site or substantial compliance exemption. Other exemptions
are self-determining. The CFPB may require additional information from developers in response
to investigations of complaints. For the purposes of communication with developers, contact
information is collected.
3. Use of Information Technology
10% of information collections submitted to CFPB take electronic form.
4. Efforts to Identify Duplication
The State Certification Program is an effort to eliminate duplication. Developers in
States that have an equivalent and certified land sales program may file a certified copy of the
State filing to meet Federal requirements. In addition, 22 States accept a Federal registration as
meeting State disclosure and consumer protection requirements.

5. Efforts to Minimize Burdens on Small Entities
Developers who have subdivisions of fewer than 100 lots are exempt from registration.
6. Consequences of Less Frequent Collection and Obstacles to Burden Reduction

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The frequency of the information collection is determined by statute and/or regulation.
Less frequent collection of the information would result in a property report not having the
current information and purchasers not having proper information on which to base their
purchases.
7. Circumstances Requiring Special Information Collection
The collections of information in these interim final rules are consistent with the
applicable guidelines contained in 5 CFR 1320.5(d)(2).
8. Consultation Outside the Agency
In accordance with 5 CFR §1320.8(d)(1), the Bureau has published a notice
Federal Register allowing the public 60 days to comment on this proposed the extension
(renewal) of this currently approved collection of information. No comments were
received. Further and in accordance with 5 CFR §1320.5(a)(1)(iv), the Bureau will also
publish a notice in the Federal Register allowing the public 30 days to comment on the
submission of this information collection request to the Office of Management and
Budget.
9. Payments or Gifts to Respondents
No payments or gifts are provided to respondents.
10. Assurances of Confidentiality
Whenever CFPB receives information obtained in association with ILSA, CFPB shall
treat the information in accordance with applicable federal law, including but not limited to the
Bureau’s confidentiality rules, 12 CFR Part 1070, and the federal laws and regulations that apply
to federal agencies for the protection of privacy, confidentiality, security and integrity.
In general, the information collected under this regulation is meant to be available to the
public, and as such there are no assurances of confidentiality. To the extent that any potentially
sensitive information is collected by the CFPB, such as the names, addresses, and financial
statements of developers, this information is being used to help avoid fraud on the part of sales
and as such necessary for this charge.
The Bureau also evaluates the potential privacy risk and harm to individuals relative to
the authorized purpose, and vets any research proposals on the data to ensure that they serve an
authorized purpose. Disclosure conducted under any studies using these data will be consistent
with the Privacy Act and the E-Government Act. The requisite SORNs (System of Records
Notice) and PIAs (Privacy Impact Assessment) will document the collection, use, disclosure, and
retention of PII; the technical, administrative, and physical controls used to minimize privacy
risks. The CFPB.012 Interstate Land Sales Registration Files (ILS), 76 FR 77470 SORN, and
the Interstate Land Sales Registration Files PIA, which is pending publication, cover the use of
the data. The SORN and PIA will be updated, as appropriate.
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11. Justification for Sensitive Questions
Developer financial statements are generally considered sensitive, especially for nonpublic companies. However, this information allows consumers transparency into developers’
financial history so they will be able to ascertain the financial condition of the company they are
transacting with.
12. Estimated Burden of Information Collection
Average
Information collection
No. of
Frequency of
Annual Response
requirement
Respondents
Response
Responses
Time
(Panel A) For land subdivisions in non-certified states
Initial Registration
Cover letter
6
1.0
6
0.25
Receipt of paid fees
6
1.0
6
0.5
Supplemental Material
6
1.8
11
20.0
§§1010.208 through
1010.219
6
1.0
6
160
Property Report
6
1.0
6
130
Consolidated Statement
of Record
Consolidation
27
1.2
32
33
Receipt of paid fees
27
1.2
32
0.5
Property Report
27
1.2
32
5.0
§§1010.208 through
1010.219
27
1.2
32
5.0
Amendment
27
3.0
80
10.0
Final Version of
Property Report
82
1.3
107
5.0
Annual Submissions
Annual Report
134
1.0
134
1.5
Receipt of paid fees
53
1.0
53
0.5
Audited financial
statements
64
1.0
64
1.0
Unaudited financial
statements
83
1.0
83
1.0
Collections given to lot
purchasers
Property Report
77
30.7
2,365
0.3
Lot Information
Statement
8
36.6
293
0.3
Deficiency Response
Amendatory Material
1
1
1
1.0
Effective Date
Suspension Request
3
1
3
1.0
(Panel B) For land subdivisions in certified states (California, Arizona, Minnesota)
Fact Sheet prepared for:
Initial Registration
2
1
2
1
Consolidation
4
1
4
1
Amendment
1
1
1
1
For all land subdivisions

Annual
Burden
Hours

Hourly
Rate

Hourly
Costs

1.5
3
220

$300
$80
$80

$450
$240
$17,600

960
780

$148
$148

$141,785
$115,200

1067
16
160

$300
$80
$148

$320,000
$1,280
$23,680

160
800

$148
$300

$23,680
$240,000

535

$148

$79,180

201
27

$100
$80

$20,100
$2,120

64

$80

$5,120

83

$80

$6,640

591

$30

$17,738

73

$30

$2,198

1

$300

$300

3

$300

$900

2
4
1

$100
$100
$100

$200
$400
$100

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Time to burn a CD
Time to print out
documents
Time to assemble and
mail the package
Total hours:
Total labor cost:

56

1.95

109

0.25

27.25

$80

$2,180

53

10.08

534

1

534

$80

$42,720

197

2.09

411

1

411

$80

$32,880

6,724
$1,096,690

In 2014, there were 197 land subdivisions that are potentially subject to ILSA
information collection requirements. These 197 land subdivisions were maintained by 180
developers. Because the information collection requirements are specified per subdivision, not
per developer, for the purposes of burden calculations, we use subdivision as a unit of analysis.
As a result, the overall number of potential respondents for 2014 is estimated to be 197.
The number of respondents varies by collection, because some collections must be
submitted only under specified circumstances. For instance, only a subdivision for which the
registration is not under suspension is obliged to submit the Annual Report (and we find that 134
out of the potential 197 did so in 2014).
The primary method of calculating the counts of collections – with an exception of
collections given out to lot purchasers – is by utilizing the database of submissions maintained
by CFPB. The advantages of this method are accuracy and consistency across periods of
renewal. The average response times and appropriate hourly rates are obtained through
interviews with industry experts.
In calculating burden hours, we make a distinction between subdivisions registered in
states that participate in the state certification program – California and Arizona, Panel B, -- and
subdivisions in other states (Panel A). Developers that sell lots in California and Arizona are
already subject to state filing requirements that are substantially similar to those required by
ILSA. The marginal burden of ILSA for such developers consists of fact sheets that they must
file along with Initial Registration, Consolidation or Amendment. The costs associated with fact
sheets are presented on Panel B.
On Panel A, we present costs associated with information collections by developers in
other states. The major component of the cost is the Property Report. We distinguish between the
cost of creating the first copy of the Property Report, which is substantial, and the cost of later
submissions, which is smaller. The first copy of the Property Report is submitted together with
other documents required by the Initial Registration. The subsequent copies of the Property
Report received by CFPB are either exact copies of the initial Property Report, or its
modifications (such as required by Consolidation or Amendment).
A special mention must be made regarding Financial Statements. ILSA requires audited
Financial Statements, which are expensive as they require a Certified Public Accountant to
produce them. However, we believe that in most cases developers have to produce them in the
normal course of business: it is a typical requirement by a bank that extended credit to a
developer. Therefore, we assume that the marginal burden of ILSA in this respect is zero. In lieu
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of audited Financial Statements, developers often submit unaudited ones. We believe that the
production of unaudited Financial Statements is mostly triggered by CFPB requirements, and
therefore we attribute the cost of their production to ILSA.
Information collections that are present in the statute but recorded zero instances during
the period of study are not shown in the table.
13. Estimated Total Annual Cost Burden to Respondents or Recordkeepers
Non-labor costs related to information collections under ILSA have two components:
registration fees and costs associated with submission of documents. The table provides detail on
both components. Consistent with our approach we count costs only associated with land
subdivisions.
Description of costs

Unit Cost

Units

Total Cost

Mailing

$30

411

$12,330

Printing, pages

$.10

112,608

$11,261

Producing CD's

$.50

109

$55

Fees paid for Initial Registration

$800

6

$4800

Fees paid for Consolidation

$800

32

$25600

Fees paid for Annual Report filing

$800

53

$42400

Total cost burden

$96,445

14. Estimated Cost to the Federal Government
There are two components of the ILSA cost for the CFPB. The first component is
the service by a third party provider, which is to scan information collections and enter
them into a database. The cost of this service is $600,000 per year. The second
component is the cost of time of four full time CFPB employees, totaling $800,000 per
year. Therefore, the estimated total annual cost to the Federal Government is $1,400,000
in 2014.
Annual cost, however, is partially offset by registration fees. These fees totaled
$149,600 in FY2014 (paid by both land and condos developers). Registration fee income
should continue to trend lower over the next two years as a result of the H.R. 2600,
eventually stabilizing at approximately $100,000 per year in FY2016.

15. Program Changes or Adjustments
Summary of Burden Changes:
Total
Respondents

Annual Responses

Burden Hours

Cost Burden
(O&M)

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Total Annual Burden Requested

197

6,772

6,724

$96,445

Current OMB Inventory
Difference (+/-)

985
-788

88,874
-82,102

17,329
-10,605

$0
+$96,445

Program Change
Discretionary
New Statute

-788
0
-788

-82,102
0
-82,102

-14,184
0
- 14,184

$0
$0
$0

0
0

0
0

0
+3,579

$0
+$96,445

Violation
Adjustment

Program Changes: The changes in the number of respondents and the number of annual
responses are primarily a result of a new legislation partially exempting condominiums from
ILSA (15 U.S.C. 1702). Specifically, we have estimated that the exemption will remove 788
respondents from out respondent pools, and the remaining respondents, owing to the nature of
their business, will have fewer annual responses per year. Therefore, whereas we previously
estimated that each respondent would respond an average of 90 times a year, we now estimate
that the number of responses per respondent will overage only 34 per year. This change has also
resulted in an estimated reduction of 14,184 annual burden hours.
Adjustments: The changes in burden hours and cost burden are also a result of an
improved methodology of calculating costs. Whereas we had previously estimated an average
response time of 12 minutes per response, our analysis leads us to estimate that the actual time
burden is closer to 1 hour per response. In addition we have identified cost burdens for
responding to these information collections that were not previously accounted for that average
$14 per response. Further, historical submissions for this collection inaccurately included burden
hour costs which have been previously removed. The new requests should be seen as a more
accurate representation of the true costs of this regulation going forward.
16. Plans for Tabulation, Statistical Analysis, and Publication
There are no plans to provide any publications based on the information collection of this
regulation.
17. Display of Expiration Date
The OMB control number and expiration date associated with this PRA submission will
be displayed on the Federal government’s electronic PRA docket at www.reginfo.gov, as well as
in the Federal Register Notice of the submission.
18. Exceptions to the Certification Requirement
The Bureau certifies that this collection of information is consistent with the requirements
of 5 CFR 1320.9, and the related provisions of 5 CFR 1320.8(b)(3) and is not seeking an
exemption to these certification requirements.

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