The Subtopics within the Real Estate—Retail Land Topic only provide incremental industry-specific guidance for the entities defined in this Scope Section, or as further defined in the Scope Sections of the individual Subtopics. Entities within the scope of this Topic shall also comply with the applicable guidance not included in this Topic.
This Topic provides guidance for all entities that sell, on a volume basis, lots that are subdivisions of large tracts of land. Such sales are characterized by down payments so small that local banks and savings and loan institutions would not loan money on the property at market rates or purchase the buyer's note for the remaining purchase price without a substantial discount. The seller is unable to enforce the sales contract or the buyer's note against the buyer's general credit. If the buyer cancels the contract within an established cancellation period, its money is refunded. Defaults by the buyer after the cancellation period result in recovery of the land by the seller and forfeiture of at least some principal payments made by the buyer. Federal and state laws may affect the amount that can be retained by the seller.
The guidance in this Topic does not apply to the following transactions and activities:
- a
Sales of lots to builders
- b
Sales of homes, buildings, and parcels of land to builders and others
- c
Sales of corporate stock of entities with substantial real estate, sales of partnership interests, and sales of time-sharing interests if the sales are in substance sales of real estate. An example of a sale of a partnership interest that is in substance a sale of real estate would be an entity forming a partnership, arranging for the partnership to acquire the property directly from third parties, and selling an interest in the partnership to investors who then become limited partners. - d
Sales of options to purchase real estate.