Our Standard Documentation
(This section is intended for our Existing Builder Clients)
We have created three documents to assist Builders in implementing Title 7. Those document are discussed below.
Title 7 and Dispute Resolution Addendum
The Title 7 and Dispute Resolution Addendum is attached to the Purchase and Sale Agreement and is signed by each buyer, the Builder and any Affiliated General Contractor. The Title 7 and Dispute Resolution Addendum generally explains the Builder's Title 7 implementation program and makes the entire Title 7 implementation program part of the Purchase and Sale Agreement. The Title 7 and Dispute Resolution Addendum has two attachments:
- Master Dispute Declaration
- The Individual Dispute Resolution Agreement
A copy of the Title 7 and Dispute Resolution Addendum should be provided to the Builder's sales staff when sales commence. At the time a purchase contract is signed, the buyer should also sign the Title 7 and Dispute Resolution Addendum. The Title 7 and Dispute Resolution Addendum may include language to be included in each buyer's grant deed. The Title 7 and Dispute Resolution Addendum may also provide buyers with a right of rescission (not required, but somewhat typical as a reasonable measure to permit buyers to read and comprehend the extensive documentation provided to them at the time they sign the contract).
In place of a separate Addendum, it is possible to incorporate all of the text from the Title 7 and Dispute Resolution Addendum into the base purchase contract.
Master Dispute Declaration
[Note: A Master Dispute Declaration is sometimes titled as "Title 7 Master Declaration" or "Master Declaration for Title 7 and Dispute Resolution."]
The Master Dispute Declaration is a recorded document which includes as exhibits some of the documents required or permitted by Title 7. Because the Master Dispute Declaration is recorded against the Builder' entire subdivision, the documents attached as exhibits need only be recorded one time -- as exhibits to the Master Dispute Declaration. The only reliable method of providing a complete plan of Title 7 implementation which is binding on the original buyer and resale purchasers is through a recorded document. The Master Dispute Declaration is intended to be such a recorded document. It is important to understand that the Performance Standards established by Title 7 govern claims against Builders, whether made by the original buyer or a resale purchaser.
A Master Dispute Declaration is ordinarily recorded against an entire subdivision concurrently with the Declaration of Covenants, Conditions and Restrictions ("CC&Rs"). If the CC&Rs are recorded in phases, then the Master Dispute Declaration is also recorded in phases. When a Declaration of Annexation is recorded to add real property to the CC&Rs, a "Supplemental Dispute Declaration" (sometimes referred to as a "Notice of Addition") is recorded to add real property to the Master Dispute Declaration. A copy of the recorded Master Dispute Declaration is then provided to each buyer when they sign a contract to purchase a residence (as an attachment to the Title 7 and Dispute Resolution Addendum -- see discussion of Title 7 and Dispute Resolution Addendum, above.)
A Master Dispute Declaration may include a builder prepared claim process (often titled "Formal Claim Process") which is different than the Pre-litigation Procedure established by Title 7. A Master Dispute Declaration may also provide that all disputes between the Builder and buyers are to be resolved by arbitration. However, subsequent to an August 2012 California Supreme Court Decision (Pinnacle Museum Tower Association v. Pinnacle Market Development) an arbitration clause is best included in the project CC&Rs. It may also be set forth in the Individual Dispute Resolution Agreement and/or the Master Dispute Declaration.
A Title 7 Declaration commonly includes the following exhibits:
- Customer Service Process: (see the discussion on Customer Service Process).
- Title 7: Builders are required to provide a complete copy of Title 7 to buyers. (California Civil Code Section 912(g))
- Fit & Finish Warranty: Builders are required to provide a Fit & Finish Warranty to buyers. (California Civil Code Section 900)
- Maintenance Manual: (see the discussion on Maintenance Manuals.)
If the Builder chooses to use an Enhanced Protection Agreement, this document would also ordinarily be attached to the Master Dispute Master Declaration as an exhibit.
Please note that we do not prepare "Maintenance Manuals" or "Enhanced Protection Agreements".
Individual Dispute Resolution Agreement
[Note: An Individual Dispute Resolution Agreement was previously commonly titled as "Title 7 Individual Declaration."]
An Individual Dispute Resolution Agreement is recorded before the Builder sells any residences. It is signed by the Builder and any Affiliated General Contractor, but not by buyers. However, Title 7 requires that the buyer initial certain items. This is one purpose of the Individual Dispute Resolution Agreement.
Additionally, portions of the Title 7 implementation plan are generally not available at the time the Master Dispute Declaration records. As an example, manufactured product information is usually gathered as the home is constructed.
The Individual Dispute Resolution Agreement is intended to provide these items which cannot be properly addressed in the Master Dispute Declaration. It establishes of record that the Builder complied with Title 7. It also is a direct agreement with the initial purchaser, making it more difficult for the purchaser to invalidate since it is signed by the purchaser, not the seller as is the case with the Master Dispute Declaration.
The Individual Dispute Resolution Agreement should be provided to the Builder's sales staff when sales commence. At the time a purchase contract is signed, the buyer should also sign the Individual Dispute Resolution Agreement. Ordinarily, this is done through the Title 7 and Dispute Resolution Addendum discussed above. The original signed Individual Dispute Resolution Agreement is then provided to the escrow officer with instructions to have the buyer's signature acknowledged and the document recorded immediately following the recording of the buyer's grant deed (ahead of the buyer's deed of trust).
Typical Recording Order
The documents described above should typically be recorded in the following order:
Documents Recorded before Sales Commence:
- CC&Rs (Phase 1)
- Master Dispute Declaration (Phase 1)
- Declaration of Annexation (Phase 2 et seq.)
- Supplemental Dispute Declaration (Phase 2 et seq.)
Documents Recorded with each Closing:
- Grant Deed to buyer
- Individual Dispute Resolution Agreement
- Drainage Restrictions, if any
- Buyer Deed of Trust
Typical Questions:
Q: What if all the exhibits to the Master Dispute Declaration are not completed at the time the CC&Rs are recorded?
It may be possible to delay recordation of the Master Dispute Declaration until just before close of the first escrows. A copy of the Master Dispute Declaration with all exhibits attached, in the most current form available, must nevertheless be provided to the buyer when they sign the Purchase and Sale Agreement. In addition, escrow instructions may be required by the Department of Real Estate to assure that the document will be recorded before any escrow closes. In all cases, the Master Dispute Declaration must record before any escrow closes.
Q:When does the Individual Dispute Resolution Agreement get signed?
The Individual Dispute Resolution Agreement is signed and dated when the Purchase and Sale Agreement is signed.
Q: When do the signatures on the Individual Dispute Resolution Agreement get Acknowledged?
It is not customary for a notary to be available at the time the Purchase and Sale Agreement is signed. For that reason, the signatures on the Individual Dispute Resolution Agreement can be acknowledged when the parties sign other documents in escrow. The signed Individual Dispute Resolution Agreement is ordinarily provided to the escrow officer with instructions to have the signatures acknowledged when the parties sign other documents to be acknowledged.
Q: What if the Escrow Officer insists on having the buyer resign the Individual Dispute Resolution Agreement?
Some title companies have a policy of not permitting an escrow officer to acknowledge a document that is not signed in their presence. In such situations, the Buyer can sign the document a second time in front of the escrow officer.
Q: Is there an alternative to a Right of Rescission?
Some Builders prefer providing the buyer with a several day right to review the documents before signing the Purchase and Sale Agreement. If the buyer is provided with complete documentation to take home and review before signing the contract, the Title 7 and Dispute Resolution Addendum can include language evidencing that right of review. In that situation, it is not necessary to also provide the buyer with a Right of Rescission. The choice between these two methods of buyer review depends on the Builder's preferences.