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

30-day Federal Register Version (2018 Renewal)
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 in September 2015.
ABSTRACT:
The Interstate Land Sales Full Disclosure Act (ILSA) requires, in relevant part,
that land developers register subdivisions of 100 or more non-exempt lots with the
Bureau of Consumer Financial Protection (the Bureau) before selling or leasing the 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 Bureau to assure compliance with ILSA and the implementing
regulations. The Bureau also investigates developers who are not in compliance with the
regulations.
JUSTIFICATION
1. Circumstances Necessitating the Data Collection
ILSA requires land developers to register with the Bureau subdivisions of 100 or
more non-exempt lots and to provide each 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 Bureau to assure compliance with ILSA and the implementing
regulations. The Bureau 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:
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Registration of Projects – 12 CFR 1010.100 - 1010.219 and 15 U.S.C. 1701
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
Statement of Record – 12 CFR 1010..21(b)
Voluntary Suspension Form – 12 CFR 1010.21(b)
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

As of March 2015, ILSA partially exempts sales and leases of condominium units. 1
Therefore, we restrict our burden estimates to collections related to land sales only.
2. Use of the Information

1

This exemption for condominium units was codified through the so-called Condominium Act, H.R. 2600, signed
into law in September 2014. The exemption, along with other exemptions, is listed in the statute at 15 U.S.C. 1702.

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Respondents are developers (or attorneys or others who work for them). As respondents,
developers must provide information to two parties: government (the Bureau) and prospective lot
purchasers.
The developer must register a subdivision with the Bureau and receive an effective date
for its registration documents before any lots from that subdivision can be sold or leased. 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
subdivision, a developer must submit a consolidated filing.
The developer must also submit to the Bureau an annual financial statement and an
annual report of activity on any initial or consolidated registration not under suspension. The
annual report of activity is to be prepared in the format required by Section 1010.310 of
Regulation J. However, a developer may voluntarily suspend the registration by submitting a
Voluntary Suspension Form, which can be obtained through request of the Bureau.
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 Bureau 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. Additionally, developers must file requests in order to claim an exemption
from registration under the multiple site or substantial compliance exemptions. Other exemptions
are self-determining. The Bureau may require additional information from developers in
response to investigations of complaints. For the purposes of communication with developers,
the Bureau collects contact information.
3. Use of Information Technology
As previously reported in our non-material change request submission, since the last
renewal of this collection in 2015 the Bureau has implemented a web portal that allows
electronic submission of many required elements of this information collection thus reducing
compliance burdens and costs.
4. Efforts to Identify Duplication
There is a State Certification Program that 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.
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5. Efforts to Minimize Burdens on Small Entities
Subdivisions of fewer than 100 lots are exempt from registration requirements.
6. Consequences of Less Frequent Collection and Obstacles to Burden Reduction
The frequency of the information collection is determined by statute and/or regulation.
Less frequent collection of the information could increase the likelihood of 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 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 published a Federal
Register notice allowing the public 60 days to comment on this proposed 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 the Bureau receives information obtained in association with ILSA, the Bureau
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 ILSA and its implementing regulations 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 Bureau, such as the names,
addresses, and financial statements of developers, this information is being used to help avoid
fraud on the part of sales or leases 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 by the federal government of information it collects pursuant to
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ILSA and its implementing regulations 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 Bureau’s CFPB.012 – Interstate Land Sales Registration Files 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.
11. Justification for Sensitive Questions
Developer financial statements are generally considered sensitive, especially for nonpublic companies. However, disclosure of 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
Information
Collection

Type of
Collection

No. of
Respondents

Frequency
of
Response

Annual
Responses

Average
Response
Time

Annual
Burden
Hours

Initial Registration
Cover letter
Receipt of paid
fees
§§1010.208
through
1010.219
Property
Report

Reporting
Reporting
Reporting
Reporting
Sub-total:

11

1

11

0.25

2.75

11

1

11

0.5

5.5

11

1

11

63

693

11

1

11

40

440

11*

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44

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1,141

Consolidated Statement of Record and Final Property Report
Consolidation
Receipt of paid
fees
Property
Report
§§1010.208
through
1010.219
Amendment
Final Version
of Property
Report

Reporting
Reporting
Reporting
Reporting
Reporting
Reporting
Sub-total:

51

1

51

15

765

51

1

51

0.5

25.5

51

1

51

1

51

51

1

51

1

51

65

1

65

5

325

67

1

67

2.5

167.5

67*

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336

///////////////

1,385

Annual Submissions

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Information
Collection
Annual Report
Receipt of paid
fees
Financial
statements
Voluntary
Suspension
Form

Type of
Collection
Reporting
Reporting
Reporting
Reporting
Sub-total:

No. of
Respondents

Frequency
of
Response

Annual
Responses

Average
Response
Time

Annual
Burden
Hours

86

1

86

0.5

43

60

1

60

0.25

15

51

1

51

0.5

25.5

1

1

1

1

1

86*

////////////

198

///////////////

85

77

30.7

2,365

0.3

709.5

8

36.6

293

0.3

87.9

77*

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2,658

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797

Collections given to lot purchasers
Property
Report
Lot
Information
Statement

rd

3 Party
Disclosure
rd

3 Party
Disclosure
Sub-total:

For land subdivisions in certified states (California, Arizona)
Fact Sheet
prepared for
Initial
Registration
Fact Sheet
prepared for
Consolidation
Fact Sheet
prepared for
Amendment

rd

3 Party
Disclosure

1

1

1

1

1

0

0

0

1

0

3

1

3

1

3

3*

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4

///////////////

4

197*

//////////////

3,240

//////////////

3,412

rd

3 Party
Disclosure
rd

3 Party
Disclosure
Sub-total:

TOTALS:
*Unduplicated potential respondents

At our last estimate, 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 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).
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
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by the Bureau. 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, -- and
subdivisions in other states 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 complying with ILSA for such developers consists of fact sheets that they must file
along with Initial Registration, Consolidation or Amendment. The costs associated with those
fact sheets are presented is noted in the above table.
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 more 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 the Bureau 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 generally requires
audited Financial Statements, produced by an independent licensed public accountant, which can
increase the cost of their production. However, we understand that in most cases developers have
to produce them in the normal course of business because banks may require them in the context
of extending credit to a developer. Therefore, we assume that the marginal burden of complying
with ILSA in this respect is zero. In lieu of audited Financial Statements, developers may
sometimes submit unaudited ones. We understand that the production of unaudited Financial
Statements is mostly triggered by the Bureau requirements—that they would not otherwise be
produced in the normal course of business—and therefore we attribute the cost of their
production to ILSA.
Information collections that are required in the statute but for which there were zero such
filings during the period of study are not shown in the table.
13. Estimated Total Annual Cost Burden to Respondents or Record-keepers
Non-labor costs related to information collections under ILSA have two components:
registration fees and costs associated with production and 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

Fees paid for Initial Registration

$800

6

$4,800

Fees paid for Consolidation

$800

32

$25,600

Fees paid for Annual Report filing

$800

53

$42,400

Total cost burden

$72,800

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14. Estimated Cost to the Federal Government
ILSA oversight costs for the Bureau are approximately $400,000 a year. This represents
the estimated cost factor of two full-time employees; the annual cost has been partially
offset by registration fees paid by the developers. Since the last renewal of this
collection, the Bureau amended the regulations to allow for the electronic filing of all
registration materials, thus reducing compliance burdens and associated costs. With this
change, the Bureau was able to eliminate a $600,000 a year contract with a third party
vendor that provided records conversion services for the Bureau.
Therefore, the estimated gross annual cost to the Federal Government is $400,000 in
2018 for two full time employees.
Annual cost to the Bureau, however, is partially offset by registration fees paid to
the Bureau by developers. These fees totaled $72,800 in the last fiscal year (paid by both
land and condos developers).
15. Program Changes or Adjustments
Summary of Burden Changes:
Total Annual Burden
Requested
Current OMB Inventory
Difference (+/-)
Program Change
Discretionary
New Statute
Violation
Adjustment

Total
Respondents
197

Annual
Responses
3,240

197
0
0
0
0
0
0

6,772
(3,532)
0
0
0
0
(3,532)

Burden
Hours

3,412

Cost
Burden
$72,800

5,752
(2,340)
0
0
-0
0
(2,340)

$82,524
($9,724)
0
0
$0
$0
($9,724)

As previously reported in the Bureau’s non-material change request submission, since the
last renewal of this collection in 2015, the Bureau has implemented a web portal that allows
electronic submission of many required elements of this information collection, thus reducing
compliance burdens and costs. Based on experience with web portal use, the Bureau has noted
further burden reduction than what was originally estimated when the portal first launched.
Additionally, the Bureau has adjusted the estimated number of annual responses to more
accurately reflect this estimate.

16. Plans for Tabulation, Statistical Analysis, and Publication

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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 Paperwork Reduction
Act (PRA) submission will be displayed on the Federal government’s electronic PRA docket at
www.reginfo.gov, as well as on the relevant information collection instruments.
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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