A person who sells or offers to sell an undivided
fractionalized long-term estate shall disclose to each prospective purchaser
certain information related to the real property in which the undivided
fractionalized long-term estate is offered, as described in this rule. A real
estate licensee who markets an undivided fractionalized long-term estate shall
obtain from the sponsor or seller and provide to each prospective purchaser the
required information related to the real property in which the undivided
fractionalized long-term estate is offered. The information required to be
disclosed hereunder shall be in written or documented form, which shall be
provided to the purchaser before purchasing, and shall include the
following:
(1) for each undivided
fractionalized long-term estate:
(a) a brief
account describing the professional qualifications, background, and experience
of the sponsor;
(b) any material
information that relates to a current lease or sublease that affects the real
property in which the undivided fractionalized long-term estate is
offered;
(c) the tenant in common
agreement or other agreement that forms the substance of the undivided
fractionalized long-term estate and includes a definition of the undivided
fractionalized interest;
(d)
description of any improvements to the real property in which the undivided
fractionalized long-term estate is offered;
(e) any defects in the property known by the
sponsor that may materially affect the value of the property;
(f) material information known by the sponsor
concerning any environmental issues affecting the real property; and,
(g) a preliminary title report on the real
property;
(2) in
addition to the disclosures required by Subsection (1), if the undivided
fractionalized long-term estate includes:
(a)
management of the real property by the sponsor or an affiliate of the sponsor
in accordance with Subsections
61-1-13(1)(ee)(ii)(C)(II) and (III), the information required to be
disclosed shall include:
(i) the sponsor's
continuing interest, if any, in the real property;
(ii) any bankruptcies or civil lawsuits
involving the sponsor and each affiliate of the sponsor;
(iii) whether any affiliate of the sponsor is
or is expected to become a third party service provider to the real
property;
(iv) any relationship
between the property managers and the sponsor; and,
(v) any property management agreements that
would continue after the sale;
(b) multiple tenants, the information
required to be disclosed shall include:
(i)
any rent rolls and payment history for the property which the sponsor has in
their possession, custody, or control; and
(ii) any tenant financial records the sponsor
has in their possession, custody, or control;
(c) debt on the real property, the
information required to be disclosed shall include:
(i) each of the loan documents; and
(ii) a current loan
statement;
(d) a master
lease agreement, the information required to be disclosed shall include:
(i) the master lease agreement;
(ii) disclosure of the sponsor's relationship
with the master tenant, if any;
(iii) if the master lease tenant is an
affiliate of the sponsor, or the sponsor participated in establishing the
master lease:
(A) audited financial statements
of the master lease tenant; and
(B)
each bankruptcy or civil lawsuit involving the sponsor, an affiliate of the
sponsor, or the master lease tenant.
