2023 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.