NY Real Prop L § 338 (2021)
2021 New York Laws RPP - Real Property Article 9-A - Subdivided Lands 338 - Inspection Power of Department of State; Unlawful Practices; Penalties.

§  338.  Inspection  power of department of state; unlawful practices; penalties. 1. The department of state may cause an investigation and  an inspection  to  be made of any subdivision of vacant land proposed to be offered for sale or lease in this state pursuant to this article and may make a report of its findings thereon.   2. Where an inspection is to be made  of  subdivided  lands,  situated outside  of  the  state  of  New York and being offered for sale in this state, the statement required by section  three  hundred  thirty-seven-a shall  be  accompanied  by the filing fee and in addition there shall be remitted to the department of state an amount equivalent to the cost  of travel  from  New  York  to  the  location of the project and return, as estimated by the department of state, and a further amount estimated  to be necessary to cover the additional expenses of such inspection, not to exceed  fifteen  dollars a day, for each day consumed in the examination of the project.   3. It shall be unlawful for the subdivider or his  or  its  agent,  to change  the  financial  structure  of such offering after the submission thereof  to  the  department  of  state  without  first  notifying   the department in writing of such intention.   4.  Where the vacant lands to be subdivided shall be subject to a lien or encumbrance securing or evidencing the payment of  money  other  than taxes  or  assessments levied by public authority, or where the interest of the owner and subdivider or his or its agent be held under option  or contract  of  purchase  or  in  trust,  it shall be unlawful to sell any vacant  land  in  such  subdivision  unless  provision  in  such   lien, encumbrance,  option,  contract  or  trust agreement, or in an agreement supplementary thereto, enables the vendor to convey valid title to  each parcel  so  sold  or  leased  free  of  such  lien, encumbrance, option, contract or  trust  agreement,  upon  completion  of  all  payments  and performance  of  all  the  terms  and conditions required to be made and performed  by  the  vendee  under  the  agreement  of  sale.  Where  the consideration  price  for  the lot or lots sold has been amortized to an extent that the balance due and owing thereunder  equals  in  an  amount required   to   release  such  lot  or  lots  from  any  existing  lien, encumbrance, tax, assessment, option contract or  first  agreement,  and the initial cost for said vacant land has not been paid for by the owner or  subdivider, that in such event all moneys thereafter received by the owner or subdivider from the purchaser of said  lot  or  lots  shall  be segregated  and kept in a separate account and be impressed with a trust which shall be applied towards the clearance of title to the vacant land thereafter intended to be conveyed to  the  purchaser.    After  default shall  have  occurred in the payment of any tax or assessment levied and assessed against the premises or after default shall have occurred under and pursuant to the terms of any  contract,  mortgage  lien,  charge  or encumbrance,  all  moneys  received  by the owner or subdivider from the purchaser of said lot or lots shall be segregated and kept in a separate account and be impressed with a trust which shall be applied towards the clearance of title to the vacant land thereafter intended to be conveyed to the purchaser. Certified or verified copies of  documents  containing such provisions shall be filed with the department of state prior to the sale or lease or offer of sale or lease of any part of the subdivision.   5.  (a)  Every  person,  officer,  director,  agent  or  employee of a company, partnership, association or corporation who or which  knowingly offers to sell or to lease, or sells or leases subdivided lands prior to the filing of the offering statement and the verified statement required by this article shall be guilty of a felony.  (b)  Except  as  provided  in  subdivision  (a)  hereof, every person, officer,  director,  agent  or  employee  of  a  company,   partnership,  corporation,  or  association who or which knowingly authorizes, directs or aids in the publication, advertisement, distribution  or  circulation of  any  device,  scheme  or artifice for obtaining money or property by means  of  any  false pretense, representation or promise concerning any vacant land or lands or subdivision thereof, offered for sale or  lease, and  every  person,  officer,  director, agent or employee of a company, partnership, corporation or association who or which shall have made  or attempts to make in the state fictitious or pretended purchases or sales of  vacant  lands,  or  who,  in any other respect, wilfully violated or fails to comply with any of the provisions of this article, or knowingly omits or neglects to obey, observe or comply  with  any  order,  permit, decision,  demand  or  requirement  of the department of state under the provisions of this article,  is  guilty  of  a  misdemeanor  and,  if  a licensee  under  article  twelve  (a) of this chapter, the department of state also may revoke or suspend his license in the manner  provided  in such  article. The commission of a single act prohibited by this article shall constitute a violation thereof. All courts  of  special  sessions, within  their  respective territorial jurisdiction, are hereby empowered to hear, try, and determine such violations without indictment,  and  to impose the punishments prescribed by law therefor.   6.  It  shall  be  the  duty  of the attorney-general to prosecute all violations of the provisions of this article; such prosecutions  may  be instituted  upon  the  written  request  or  demand of the department of state.  In all criminal proceedings, the attorney-general may appear  in person or by his deputy before any court of record or any grand jury and exercise  all  the  powers and perform all the duties in respect of such actions or proceedings which the district attorney  would  otherwise  be authorized  or  required to exercise or perform; or the attorney-general may in his discretion transmit evidence, proof  and  information  as  to such offense to the district attorney of the county or counties in which the  alleged violation has occurred, and every district attorney to whom such evidence, proof and information is so transmitted  shall  forthwith proceed  to prosecute any corporation, company, association, or officer, manager or agent thereof, or  any  firm  or  person  charged  with  such violation.  In  any  such  proceeding,  wherein the attorney-general has appeared either in person or by deputy, the district attorney shall only exercise such powers and perform such duties as are required of  him  by the  attorney-general  or  the deputy attorney-general so appearing. The attorney-general shall,  upon  a  conviction  for  a  violation  of  any provision of this article, and within ten days thereafter, make and file with  the department of state a detailed report showing the date of such conviction, the name of the person convicted and the exact nature of the charge.   7. Any false statement contained  in  any  statement  or  supplemental statement   filed   with   the  department  of  state  pursuant  to  the requirements of this article, or  in  any  affidavit  attached  thereto, shall constitute a violation of this article.   8.  Any  person,  partnership,  corporation,  company  or  association representing in any manner that the state, the department of  state,  or any  officer thereof has recommended or acquiesced in the recommendation of the purchase of any subdivided lands offered for sale  or  lease,  in advertising  or  offering such subdivided lands for sale or lease, shall be guilty of a misdemeanor punishable by a fine of  not  more  than  one thousand  dollars, or imprisonment for not more than one year or by both such fine and imprisonment.