PRIOR PRINTER'S NO. 321 PRINTER'S NO. 3640
No. 301 Session of 1979
INTRODUCED BY MESSRS. WILSON, FEBRUARY 13, 1979
AS REPORTED FROM COMMITTEE ON CONSUMER AFFAIRS, HOUSE OF
REPRESENTATIVES, AS AMENDED, JUNE 23, 1980
AN ACT
1 Regulating subdivision sales, providing penalties and making an
2 appropriation.
3 TABLE OF CONTENTS
4 Section 1. Short title.
5 Section 2. Purpose and definitions.
6 Section 3. Administrative agency.
7 Section 4. General powers and duties.
8 Section 5. Application for registration.
9 Section 6. Fees.
10 Section 7. Inquiry and examination.
11 Section 8. Inspections.
12 Section 9. Encumbrances.
13 Section 10. Investigation proceedings.
14 Section 11. Revocation.
15 Section 12. Cease and desist orders.
16 Section 13. Civil remedy.
17 Section 14. Penalties.
18 Section 15. Exemptions.
1 Section 16. Prohibitions on dispositions of interests in
2 subdivisions.
3 Section 17. Public offering statement.
4 Section 18. Taking effect of registration statements and
5 amendments thereto.
6 Section 19. Annual report.
7 Section 20. Registration and regulation of salesmen.
8 Section 21. Inactive subdivider.
9 Section 22. Right of rescission.
10 Section 23. Waivers.
11 Section 24. Service of process.
12 Section 25. Judicial review.
13 Section 26. Restitution.
14 Section 27. Compliance with Department of Environmental
15 Resources.
16 Section 28. Appropriation SUBDIVIDED LAND SALES FUND. <--
17 Section 29. Effective date.
18 The General Assembly of the Commonwealth of Pennsylvania
19 hereby enacts as follows:
20 Section 1. Short title.
21 This act shall be known and may be cited as the "Subdivided
22 Land Sales Act."
23 Section 2. Purpose and definitions.
24 (a) This act is remedial as well as requiring registration
25 and approval and the remedial portions hereof shall be liberally
26 construed to effectuate this purpose.
27 (b) As used in this act:
28 "Advertising." The publication or causing to be published of
29 information by means of a newspaper or periodical, radio or
30 television broadcast, telephone, other electronic means, or by
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1 written or printed or photographic matter produced by any
2 duplicating process producing ten copies or more, offering for
3 sale or for the purpose of causing or inducing a person to
4 purchase or to acquire an interest in the title to subdivided
5 lands, including the land sales contract to be used and any
6 photographs or drawings or artists' representations of physical
7 conditions or facilities on the property existing or to exist.
8 It does not include: stockholder communications such as annual
9 reports and interim financial reports, proxy materials,
10 registration statements, securities prospectuses, applications
11 for listing securities on stock exchanges, prospectuses,
12 property reports, offering statements or other documents
13 required to be delivered to prospective purchasers by an agency
14 of any other state or the Federal Government, communications
15 addressed to and relating to the account of any persons who have
16 previously executed a contract for the purchase of the
17 subdivider's lands, except where directed to the sale of
18 additional lands, press releases or other communications
19 delivered to newspapers or other periodicals for general
20 information or public relations purposes if no charge is made by
21 such newspapers or other periodicals for the publication or use
22 of any part of such communications.
23 "Disposition." The sale, lease, assignment, or any other
24 transaction concerning a subdivision, if undertaken for gain or
25 profit.
26 "Encumbrance." A claim, lien, charge or liability attached
27 to and binding real property.
28 "Inactive subdivider." A registered subdivider who sells
29 less than ten lots in a calendar year.
30 "Notice" A communication by mail from the agency executed by
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1 its duly authorized officer. Notice to subdividers is complete
2 when mailed to the subdivider's address currently on file with
3 the commission.
4 "Offer" An inducement, solicitation or attempt to encourage
5 a person to acquire an interest in land.
6 "Person." An individual, corporation, government, or
7 governmental subdivision or agency, business trust, estate,
8 trust, partnership, unincorporated association, two or more of
9 any of the foregoing having a joint or common interest, or any
10 other legal or commercial entity.
11 "Purchaser." A person who acquires or attempts to acquire or
12 succeeds to an interest in land.
13 "Salesman." A person who, for another and for a fee,
14 commission or other valuable consideration, sells, promotes,
15 exchanges, purchases, rents or negotiates the sale, promotion,
16 exchange, purchase or rental, or offers or attempts to negotiate
17 the sale, promotion, exchange, purchase or rental, or holds
18 himself out as engaged in the selling, promotion, exchanging,
19 purchasing, or renting of any real property of another, whether
20 it is located within the Commonwealth or elsewhere or who
21 collects or offers to attempt to collect rental for the use of
22 real property of another or who negotiates, offers or attempts
23 to negotiate a loan, secured or to be secured by a mortgage or
24 other encumbrance upon or transfer of any such real property.
25 "Subdivider." A person who engages directly or through an
26 agent in the disposition of subdivided lands and subdivisions.
27 "Subdivision" and "subdivided lands." Any land which is
28 divided or is proposed to be divided for the purpose of
29 disposition into 25 or more lots, parcels, units or interests.
30 It includes land, whether contiguous or not, whenever 25 or more
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1 lots, parcels, units or interests are offered as part of a
2 common promotional plan of advertising and sale.
3 Section 3. Administrative agency.
4 (a) This act shall be administered by the Subdivided Land
5 Sales Commission which is hereby created and hereafter is
6 designated the commission.
7 (b) The commission shall be composed of five members <--
8 appointed by the Governor SIX MEMBERS. FIVE MEMBERS SHALL BE <--
9 APPOINTED BY THE GOVERNOR, NO MORE THAN TWO OF WHOM SHALL BE
10 REAL ESTATE SALESMEN OR BROKERS LICENSED IN THE COMMONWEALTH.
11 ONE MEMBER SHALL BE THE DIRECTOR OF THE BUREAU OF CONSUMER
12 PROTECTION OR HIS DESIGNEE.
13 (c) The Governor shall appoint an executive secretary.
14 Vacancies in the commission shall be filled in the same manner
15 as the original appointments.
16 (d) The commission may select from its membership such
17 officers, other than chairman, that it deems necessary. The
18 commission may contract for studies and other special services
19 for the purpose of carrying out this act.
20 (e) The commission shall appoint advisory committees from
21 outside its membership. Such committees shall serve at no cost
22 to the Commonwealth.
23 (f) Members of the commission shall serve without
24 compensation, but shall be reimbursed for actual necessary
25 expenses incurred in the performance of their duties, as
26 authorized by the commission chairman.
27 (g) A majority of the members shall constitute a quorum for
28 the transaction of business for the commission.
29 (h) The commission may act at any regular or special
30 meeting. Regular meetings shall be held once during each three-
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1 month period and special meetings may be called by the chairman
2 at any time he deems it is necessary to handle special or
3 emergency matters. The commission may act without a meeting if a
4 majority of the members approve of the action taken in writing.
5 A member who does not attend three consecutive meetings without
6 good cause, may be replaced.
7 Section 4. General powers and duties.
8 (a) The commission shall prescribe rules and regulations
9 which shall be adopted, amended or repealed in compliance with
10 the Commonwealth Documents Law.
11 (b) The commission by rule, regulation or order shall
12 require the filing of advertising material relating to
13 subdivided lands prior to its distribution, and may charge a fee
14 set by it for each item of advertising or promotional material
15 filed.
16 (c) If it appears that a person has engaged or is about to
17 engage in an act or practice constituting a violation of a
18 provision of this act or ruling, or order hereunder, the
19 commission with or without prior administrative proceedings may
20 bring an action in the Commonwealth Court to enjoin the acts or
21 practices and to enforce compliance with this act, rule,
22 regulation or order thereunder. Upon proper showing, injunctive
23 relief shall be granted, and a receiver may be appointed. The
24 commission shall not be required to post a bond in any court
25 proceedings under this act.
26 (d) The commission may intervene in a suit involving
27 subdivided lands. In any suit by or against a subdivider
28 involving subdivided lands, the subdivider shall promptly
29 furnish the commission notice of the suit and copies of all
30 pleadings.
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1 (e) The commission may:
2 (1) Contract with an independent firm or government
3 related agency to perform investigative functions under this
4 act.
5 (2) Accept grants in aid from any source.
6 (f) The commission shall cooperate with similar agencies in
7 other jurisdictions to establish uniform filing procedures and
8 forms, uniform public offering statements, advertising
9 standards, rules and common administrative practices.
10 (g) Advertising submitted as part of the initial
11 registration of land shall be treated as part of such initial
12 registration. Advertising submitted subsequent thereto shall be
13 deemed a subsequent filing and the commission may require such
14 further or other supporting data as may be deemed necessary at
15 the time of the subsequent filing. Such subsequent filing shall
16 be approved or disapproved within ten days from the date of
17 filing. If the commission fails to approve or disapprove such
18 information within ten days, the subdivider filing the same may
19 publish or cause to be published or distributed all information
20 which has been properly filed. Advertising shall also include,
21 but not be limited to, materials used by the subdividers or
22 their agents to induce prospective purchasers to visit this
23 Commonwealth, particularly vacation certificates which require
24 the holders of such certificates to attend or submit to a sales
25 presentation by a subdivider or its agents, and the commission
26 may require full disclosure of pertinent information concerning
27 a vacation or visitor campaign including but not limited to
28 terms and conditions of such offers and the fact and extent of
29 participation in such a campaign by a subdivider. The commission
30 may require reasonable assurances that the obligations incurred
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1 by the subdivider or its agents in a certificate program can be
2 met.
3 (h) The commission shall prepare and issue a detailed
4 property report annually concerning all the subdivisions in the
5 Commonwealth in language intelligible to a person with an
6 eighth-grade education. Attached to the front of it shall be a
7 special cover page with a warning to consumers. It shall
8 instruct them to read the report before signing anything. It
9 shall include:
10 (1) An economic feasibility report regarding the
11 developer's financial capability.
12 (2) A statement of special risk factors if any.
13 (3) An indication of whether a building permit is
14 required.
15 (4) Whether the quality and quantity of the water supply
16 is adequate.
17 (5) Specific statements concerning availability of
18 utilities, sewage, year-round fire protection and flood
19 insurance.
20 (6) A statement indicating whether the subdivision can
21 be reached by automobile.
22 (7) A statement as to whether fringe benefits are
23 obligations or only promises.
24 Section 5. Application for registration.
25 (a) The application for registration of subdivided lands
26 shall be filed as prescribed by the commission's rules,
27 regulations and orders and shall contain the following documents
28 and information:
29 (1) An irrevocable appointment of the commission to
30 receive service of any lawful process in any noncriminal
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1 proceeding arising under this act against the applicant or
2 his personal representative.
3 (2) A legal description of the subdivided lands offered
4 for registration, together with a map or plat showing the
5 division proposed or made, and the dimensions of the lots,
6 parcels, units or interests and the relation of the
7 subdivided lands to existing streets, roads and other off-
8 site improvements.
9 (3) The states or jurisdictions in which an application
10 for registration or a similar document has been filed, any
11 adverse order, judgment, or decree entered in connection with
12 the subdivided lands by the regulatory authorities in such
13 jurisdiction or by any court, and a list of all states or
14 countries where the offering will be made.
15 (4) The applicant's name, address and the form, date and
16 jurisdiction of organization, and the address of each of its
17 offices in this Commonwealth.
18 (5) The name, address, principal occupation for the past
19 five years of every director and officer of the applicant or
20 person occupying a similar status or performing similar
21 functions; the extent and nature of any interest in the
22 applicant or the subdivided lands as of a specified date
23 within 30 days of the filing of the application of every
24 person whose interests exceed a 10% interest in the
25 subdivider.
26 (6) A statement, in a form acceptable to the commission,
27 of the condition of the title to the subdivided lands
28 including encumbrances as of a specified date within 30 days
29 of the date of application by an attorney at law, a title
30 officer or director of the applicant or owner, copies of the
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1 instruments by which the interest in the subdivided lands was
2 acquired and copies of the documents creating any liens,
3 easements, or encumbrances on the property, statement of the
4 consequences for purchaser of failure to discharge a lien or
5 encumbrance and the steps taken, or to be taken to protect
6 the purchaser in case of this eventuality.
7 (7) Copies of the instruments which will be delivered to
8 a purchaser to evidence his interest in the subdivided lands
9 and of the contracts and other agreements which a purchaser
10 will be required to agree to or to sign.
11 (8) A statement on the installation of water and
12 sewerage facilities as required by the rules, regulations or
13 orders of the commission.
14 (9) A statement of the zoning and other governmental
15 regulations affecting the use of the subdivided lands and
16 also of any existing tax and existing or proposed special
17 taxes or assessments which affect the subdivided lands.
18 (10) A statement of the existing provisions for legal
19 and physical access or, if none exist, a statement to that
20 effect, a statement of public utilities available or to be
21 available in the subdivision including water and sewer, a
22 statement of the improvements such as, but not limited to,
23 recreational facilities or lakes to be created, the schedule
24 for their completion, and a statement as to the provisions
25 for improvement maintenance.
26 (11) A narrative description of the promotional plan for
27 the disposition of the subdivided lands together with copies
28 of all advertising material which has been prepared for
29 public distribution by any means of communication.
30 (12) The proposed public offering statement.
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1 (13) A statement of the potential effect of the
2 subdivision on environmental factors in surrounding areas.
3 (14) Any other information, including, but not limited
4 to, a current financial statement, which the commission by
5 its rules, regulations and orders requires for the protection
6 of purchasers.
7 (b) Whenever the subdivider registers additional subdivided
8 lands to be offered for disposition, he may consolidate the
9 subsequent registration with any earlier registration offering
10 subdivided lands for disposition under the same promotional
11 plan.
12 (c) The subdivider shall immediately report to the
13 commission any material change in the information contained in
14 an application for registration or amendments thereto.
15 Section 6. Fees.
16 The commission shall charge a filing fee for each application
17 for registration of subdivided land located within the
18 Commonwealth of Pennsylvania which fee shall be based on the
19 following schedule:
20 (1) A fee of $500 for a subdivision comprised of fewer
21 than 100 BUT NO MORE THAN 25 lots, parcels, units or <--
22 interest, plus a fee of $10 for each lot, parcel, unit or
23 interest over 100.
24 (2) Each filing or registration shall be renewed
25 annually and the fee therefor shall be $200 $500 OR $25 PER <--
26 LOT, WHICHEVER IS HIGHER. The renewal fee shall be payable no
27 later than January 31. The commission may SHALL assess a <--
28 penalty not to exceed $10 EQUAL 10% OF THE FEE per day for <--
29 each day after January 31 that the registration is
30 delinquent. but said penalty shall not exceed the sum of <--
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1 $300. The registration of subdivisions which are more than
2 ten days delinquent in renewing their registrations shall be
3 automatically suspended until such time as the proper renewal
4 fee, plus penalties, if any, has been submitted to the
5 commission.
6 (3) The commission shall charge out of state
7 subdivisions disposed of or offered for disposition in this
8 Commonwealth an initial fee and an annual fee equal to the
9 fees charged for subdivided land located within the
10 Commonwealth.
11 Section 7. Inquiry and examination.
12 Upon receipt of an application for registration in proper
13 form, the commission shall forthwith initiate an examination to
14 determine that:
15 (1) The subdivider can convey or cause to be conveyed
16 the interest in subdivided lands offered for disposition if
17 the purchaser complies with the terms of the offer necessary
18 to effect conveyance, that release clauses, conveyances in
19 trust and other safeguards have been provided.
20 (2) There is reasonable assurance that all proposed
21 improvements will be completed as represented. If
22 improvements provided in this act are to be furnished by the
23 seller and are not completed, provisions for completion shall
24 be made in the form of a completion bond or escrow of
25 adequate funds and in such an amount as is sufficient to
26 complete such improvements. Such security shall be posted
27 with the proper public authority in the municipality where
28 the subdivision is located; and, a copy shall also be
29 furnished to the commission.
30 (3) The advertising material and the general promotional
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1 plan are not false or misleading and comply with the standards
2 prescribed by the commission in its rules, regulations and
3 orders and afford full and fair disclosure.
4 (4) The subdivider has not been convicted of a crime
5 involving land dispositions or any aspect of the land sales
6 business in this Commonwealth, United States, or any other
7 state or foreign country within the past ten years, or have
8 been enjoined by any court within this Commonwealth of any
9 violation of any State law regarding the sale of subdivided
10 lands within this Commonwealth, and has not violated any
11 Consumer Protection Act or Securities Law or regulations
12 within the past ten years.
13 (5) There is no evidence which would reasonably lead the
14 commission to believe that the subdivider is contemplating a
15 fraudulent or misleading sales promotion.
16 (6) The public offering statement requirements of this
17 act have been satisfied.
18 Section 8. Inspections.
19 The commission and Department of Environmental Resources
20 shall investigate every such subdivision offered for sale in
21 this Commonwealth, and:
22 (1) May rely upon any relevant information concerning a
23 subdivision obtained from any other state or Federal agency
24 having comparable duties in relation to subdivision and sale
25 of real property.
26 (2) Require the applicant to submit reports prepared by
27 competent engineers as to any hazard to which any subdivision
28 offered for sale is subject to in the opinion of the
29 commission, or any factor which affects the utility of lots
30 or parcels within the subdivision and require evidence of
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1 compliance to remove or minimize all hazards stated by
2 competent engineering reports.
3 (3) Make an on-site inspection of each subdivision. In
4 connection with any on-site inspection, the owner, subdivider
5 or agent shall defray all expenses and wages incurred by the
6 inspector in the course of the inspection.
7 (4) Require the owner, subdivider or agent to deposit
8 the expenses and wages to be incurred in any inspection or
9 reinspection, in advance, based upon an estimate by the
10 commission of those expenses and wages likely to be incurred.
11 (5) In those cases where an on-site inspection of any
12 subdivision has been made under the provisions of this act,
13 an inspection of a subsequent registration submitted as an
14 amendment to said registration covering subdivided land to be
15 sold under the same common promotional plan, may be waived,
16 and an inspection thereof shall be made in connection with
17 the next succeeding annual on-site reinspection.
18 Section 9. Encumbrances.
19 Where the vacant lands to be subdivided shall be subject to a
20 lien or encumbrance securing or evidencing the payment of money
21 other than taxes or assessments levied by public authority, or
22 where the interest of the owner or subdivider is held under
23 option of contract or purchase or in trust, it shall be unlawful
24 to sell land in such subdivision unless provision in such lien,
25 encumbrance, option, contract or trust agreement, or in an
26 agreement supplementary thereto, enables the vendor or its
27 successor to convey valid title to each parcel so sold or leased
28 free of such lien, encumbrance, option, contract or trust
29 agreement, upon completion of all payments and performance of
30 the terms and conditions required to be made and performed by
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1 the vendee under the agreement of sale. Where the consideration
2 for the lot or lots sold has been amortized to an extent that
3 the balance due and owing thereunder equals an amount required
4 to release such lot or lots from any existing lien, encumbrance,
5 tax, assessment, option, contract or first agreement, and the
6 land has been or is subject to an encumbrance, then in such
7 event all moneys thereafter received by the owner or subdivider
8 from the purchase of said lot or lots shall be segregated and
9 kept in a separate account and be impressed with a trust which
10 shall be applied towards the clearance of title to the land
11 thereafter intended to be conveyed to the purchaser. Whenever
12 default occurs in the payment of any tax or assessment levied
13 and assessed against the premises or pursuant to the terms of a
14 contract, mortgage lien, charge or encumbrance, all moneys
15 received by the owner or subdivider from the purchaser of said
16 lot or lots shall be segregated and kept in a separate account
17 and be impressed with a trust which shall be applied towards the
18 clearance of title to the land thereafter intended to be
19 conveyed to the purchaser. Certified or verified copies of
20 documents containing such provisions shall be filed with the
21 commission prior to the sale or lease or offer of sale or lease
22 of any part of the subdivision.
23 Section 10. Investigation proceedings.
24 (a) The commission may:
25 (1) Make necessary public or private investigations
26 within or outside of this Commonwealth to determine whether
27 any person has violated or is about to violate this act or a
28 rule, regulation or order hereunder, or to aid in the
29 enforcement of this act or in the prescribing of rules,
30 regulations, orders and forms hereunder.
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1 (2) Require or permit a person to file a statement in
2 writing under oath or otherwise, as the commission
3 determines, as to the facts and circumstances concerning the
4 matters to be investigated.
5 (b) For the purpose of an investigation or proceeding under
6 this act, the commission or officer designated by its rules,
7 regulations or orders, may administer oaths or affirmations, and
8 upon its own motions or upon request of a party to such
9 investigation or proceeding shall subpoena witnesses, compel
10 their attendance, take evidence and require the production of
11 all material which is relevant to the investigation, including
12 the existence, description, nature, custody, condition and
13 location of books, documents, or other tangible things and the
14 identity and location of persons having knowledge of relevant
15 facts or other matters reasonably calculated to lead to the
16 discovery of material evidence.
17 (c) Upon failure to obey a subpoena or to answer questions
18 propounded by the investigating officer and upon reasonable
19 notice to all parties affected thereby, the commission may apply
20 to Commonwealth Court for an order compelling compliance.
21 Section 11. Revocation.
22 (a) A registration may be revoked after notice and hearing
23 upon a written finding of fact that the subdivider has:
24 (1) Failed to comply with the terms of this act or cease
25 and desist order.
26 (2) Been convicted in any court subsequent to the filing
27 of the application for registration of a crime involving
28 fraud, deception, false pretenses, misrepresentation, false
29 advertising or dishonest dealing in real estate transactions.
30 (3) Disposed of, concealed, or dispersed funds or assets
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1 of a person so as to defeat the rights of a subdivision
2 purchaser.
3 (4) Failed to faithfully perform a stipulation or
4 agreement made with the agency as an inducement to grant a
5 registration, to reinstate any registration, or to approve a
6 promotional plan or public offering statement.
7 (5) Made intentional misrepresentations or concealed
8 material facts in an application for registration.
9 (b) If the commission finds, after notice is given of the
10 opportunity for a hearing, that the subdivider has been guilty
11 of a violation for which revocation could be ordered, it may
12 issue a cease and desist order instead.
13 Section 12. Cease and desist orders.
14 (a) Whenever the commission determines, after notice is
15 given of the opportunity for a hearing, that a person has:
16 (1) violated a provision of this act;
17 (2) directly or through an agent or employee knowingly
18 engaged in a false, deceptive, or misleading advertising,
19 promotional or sales method to offer or dispose of an
20 interest in subdivided lands;
21 (3) made a substantial change in the plan of disposition
22 and development of the subdivided land subsequent to the
23 order of registration without obtaining prior written
24 approval from the commission;
25 (4) disposed of any subdivided land which has not been
26 registered with the commission; or
27 (5) violated a lawful order or rule of the agency, it
28 may issue an order requiring the person to cease and desist
29 from the unlawful practices and take such affirmative action
30 as in the judgment of the commission will carry out the
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1 purposes of this act.
2 (b) If the commission makes a finding of fact in writing
3 that the public interest will be irreparably harmed by delay in
4 issuing an order, it may issue a temporary cease and desist
5 order. Prior to issuing a temporary cease and desist order, the
6 commission shall give notice of the proposal to issue a
7 temporary cease and desist order to the person involved. A
8 temporary cease and desist order shall include in its terms a
9 provision that upon request a hearing will be held within 20
10 days of the receipt by the commission of a written request for a
11 hearing to determine whether it should become permanent or
12 should be withdrawn.
13 Section 13. Civil remedy.
14 (a) A subdivider who disposes of subdivided lands in
15 violation of the provisions of this act, or, in disposing of
16 subdivided lands makes an untrue statement of a material fact,
17 or, in a registration statement or public offering statement
18 makes an untrue statement of a material fact, or omits a
19 material fact required to be stated therein, is liable as
20 provided in this section to the purchaser unless, in the case of
21 an untruth or omission, it is proved that the purchaser knew of
22 the untruth or omission or that the subdivider offering or
23 disposing of subdivided lands did not know and in the exercise
24 of reasonable care could not have known of the untruth or
25 omission or that the purchaser did not rely on the untruth or
26 omission.
27 (b) In addition to any other remedies, the purchaser, for a
28 violation of this section, may sue either in law or in equity to
29 recover the consideration paid for the lot, parcel, unit or
30 interest in subdivided lands, the cost of improvements erected
19790H0301B3640 - 18 -
1 thereon by him together with interest at the rate of 6% per year
2 from the date of payment, property taxes paid, court costs and
3 reasonable attorneys' fees, less the amount of any income
4 received from the subdivided lands upon tender of appropriate
5 instruments of reconveyance made at any time before the entry of
6 judgment.
7 (c) A person who materially participates in any disposition
8 of subdivided lands in the manner specified in this section
9 shall also be liable jointly and severally with and to the same
10 extent as the subdivider, unless such person otherwise liable
11 did not know, and in the exercise of reasonable care could not
12 have known of the existence of the facts by which such liability
13 is alleged to exist. There shall be a right of contribution as
14 in cases of contracts among persons so liable.
15 (d) A person whose occupation gives authority to a
16 statement, which with his consent has been used in an
17 application for registration or public offering statement, who
18 is not otherwise associated with the subdivision and development
19 plan in a material way, is liable only for false statements and
20 omissions in his statement if he did know or in the exercise of
21 the reasonable care of a man in his occupation should have known
22 of the existence of the facts by reason of which the liability
23 is alleged to exist.
24 (e) An action shall not be maintained to enforce any
25 liability created under this section unless brought within two
26 years after the discovery of the untrue statement or the
27 omission, or after such discovery should have been made by the
28 exercise of reasonable diligence. In no event shall any such
29 action be brought more than five years after the date the
30 purchaser made his first payment of money to the subdivider.
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1 (f) A stipulation or provision purporting to bind a person
2 acquiring subdivided lands to waive compliance with this act or
3 a rule or order under it is void.
4 (g) A person entitled to bring an action under this section
5 may, if the unlawful method, act, or practice has caused similar
6 injury to persons similarly situated, bring an action on behalf
7 of other similarly injured and situated persons to recover
8 damages provided herein. In an action brought under this
9 subsection, the court may order such additional relief as it
10 deems necessary or proper including reasonable attorney fees.
11 Section 14. Penalties.
12 (a) A subdivider who willfully violates any provision of
13 this act or who willfully, in an application for registration
14 makes any untrue statement of a material fact or omits to state
15 a required material fact, shall pay a civil penalty of not less
16 than $5,000, nor more than $100,000 plus costs, or double the
17 amount of gain from the transaction, whichever is larger, but
18 not more than $500,000. A person other than a subdivider who
19 willfully violates any cease and desist order issued under a
20 provision of this act or who willfully, in an application for
21 registration makes an untrue statement of a material fact or
22 omits to state a required material fact, shall pay a civil
23 penalty of not less than $5,000, plus costs.
24 (b) In addition to the above penalty, all expenses of
25 investigations and litigation shall be paid by the person or
26 subdivider.
27 Section 15. Exemptions.
28 (a) Unless the method of disposition is adopted for the
29 purpose of evading this act, the provisions of this act do not
30 apply to offers or disposition of an interest in land:
19790H0301B3640 - 20 -
1 (1) By a purchaser of subdivided lands for his own
2 account in a single or isolated transaction.
3 (2) Whenever not more than 25 separate lots, parcels,
4 units or interests in subdivided lands are offered by a
5 person in a period of one year.
6 (3) Pursuant to court order.
7 (4) By a government or governmental agency.
8 (5) As cemetery lots or interests.
9 (6) By evidences of indebtedness secured by a mortgage
10 of deed of trust of real estate if the offer or disposition
11 is to one person for the entire amount of the indebtedness
12 secured by the mortgage or deed of trust.
13 (7) By securities or units of interest issued by a real
14 estate investment trust regulated under any State or Federal
15 statute.
16 (8) By securities currently registered with the
17 Pennsylvania Securities Commission.
18 (9) By an interest in oil, gas, or other minerals or any
19 royalty interest therein if the offers or dispositions of
20 such interests are regulated as securities by the United
21 States or by the Pennsylvania Securities Commission.
22 (10) By constituting a single sale or offer to sell to a
23 person when the sale and purchase price is $50,000 $100,000 <--
24 or more.
25 (11) WHENEVER LAND IS SOLD IN PARCELS OF TEN OR MORE <--
26 ACRES.
27 (b) The provisions of this act do not apply to offers or
28 dispositions of lots contained in a recorded subdivision plot,
29 provided that all of the following conditions exist:
30 (1) Each lot is situated on a paved and dedicated road
19790H0301B3640 - 21 -
1 or street constructed to the specifications of the
2 municipality which has accepted such road or street for
3 maintenance.
4 (2) The subdivision has drainage structures and fill
5 which have been approved by the municipality.
6 (3) Electric power is available at or near each lot.
7 (4) Approved domestic water supply and central sewerage
8 systems are available at each lot.
9 (5) The subdivider has clear title to such subdivided
10 lands and is at all times prepared to convey clear title to
11 the purchaser.
12 (6) All sales of lots are made by the subdivider after
13 on-site inspections by the purchaser.
14 (7) All other promised improvements are completed or
15 escrow or bond provided for their completion.
16 (c) The provisions of this act shall not apply to the sale
17 or lease of land to any person engaged in the business of
18 construction of residential or commercial buildings or to any
19 person who acquires such land for the purpose of resale or lease
20 to a person engaged in such business. nor shall this act apply <--
21 to a subdivision where the plan of promotion and disposition is
22 primarily directed to persons in the local trading area in which
23 the subdivision is located.
24 (d) The provisions of this act shall not apply to the sale
25 or lease of lots of land on which there is a residential,
26 commercial or industrial building or to the sale or lease of any
27 lots of land under a contract obligating the seller to erect a
28 building thereon within two years of the date of the contract.
29 (E) THE PROVISIONS OF THIS ACT SHALL NOT APPLY WHENEVER <--
30 THERE IS A WRITTEN AGREEMENT BETWEEN SELLER AND PURCHASER THAT
19790H0301B3640 - 22 -
1 THERE ARE TO BE NO IMPROVEMENTS MADE BY THE SELLER.
2 Section 16. Prohibitions on dispositions of interests in
3 subdivisions.
4 Unless the subdivided lands or the transaction is exempt:
5 (1) A person may not offer, dispose or participate in an
6 offer or disposition of any interest in subdivided lands
7 located in this Commonwealth, nor offer, dispose, or
8 participate in an offer or disposition of subdivided lands in
9 this Commonwealth of any interest in subdivided lands located
10 without this State prior to the time the subdivided lands are
11 registered in accordance with this act.
12 (2) A person may not dispose or participate in the
13 disposition of any interest in subdivided lands unless a
14 current public offering statement is delivered to the
15 purchaser at the initial contact with the purchaser, when
16 either by owner, salesman, promoter, mail, or the office or
17 other personnel of the subdivider or his agent, and the
18 purchaser is afforded a reasonable opportunity to examine the
19 public offering statement prior to purchasing.
20 Section 17. Public offering statement.
21 (a) A public offering statement shall disclose fully and
22 accurately the physical characteristics of the subdivided lands
23 offered and shall make known to prospective purchasers all
24 unusual and material circumstances or features affecting the
25 subdivided lands. THE PUBLIC OFFERING STATEMENT MUST BE <--
26 SUBMITTED TO A PROSPECTIVE PURCHASER BY THE SELLER AT LEAST 24
27 HOURS BEFORE THE TIME THAT ANY CONTRACT BETWEEN THE SELLER AND
28 PURCHASER IS SIGNED. The proposed public offering statement
29 submitted to the commission shall be in a form prescribed by its
30 rules, regulations, and orders and shall include the following,
19790H0301B3640 - 23 -
1 unless otherwise provided by the commission:
2 (1) The name and principal address of the subdivider.
3 (2) A general description of the subdivided lands
4 stating the total number of lots, parcels, units or interests
5 in the offering.
6 (3) The significant terms of any encumbrances,
7 easements, liens and restrictions, including zoning and other
8 regulations affecting the subdivided lands and each unit or
9 lot, and a statement of all existing taxes and existing or
10 proposed special taxes or assessments which affect the
11 subdivided lands.
12 (4) A statement of the use for which the property is
13 offered.
14 (5) Information concerning improvements, including
15 streets, water supply, levees, drainage control systems,
16 irrigation systems, sewage disposal facilities and customary
17 utilities, and the estimated cost, date of completion and
18 responsibility for construction and maintenance of existing
19 and proposed improvements which are referred to in connection
20 with the offering or disposition of any interest in
21 subdivided lands.
22 (6) A provision for insertion of the date of approval of
23 the public offering statement by the commission.
24 (7) A STATEMENT THAT THE SUBDIVIDER WILL NOT PROHIBIT <--
25 PURCHASERS FROM LISTING THEIR PROPERTY FOR RESALE WITH A REAL
26 ESTATE BROKER OF THEIR OWN CHOICE AND POSTING A "FOR SALE"
27 SIGN ON THE PROPERTY.
28 (7) (8) Additional information required by the <--
29 commission to assure full and fair disclosure to prospective
30 purchasers.
19790H0301B3640 - 24 -
1 (b) The public offering statement shall not be used for any
2 purpose before the registration of the subdivided lands and
3 afterwards only if it is used in its entirety. A person shall
4 not advertise or represent that the commission approves or
5 recommends the subdivided lands or disposition thereof. A
6 portion of the public offering statement shall not be
7 underscored, italicized or printed in larger or heavier or
8 different color type than the remainder of the statement unless
9 the commission requires or permits it.
10 (c) The commission may require the subdivider to alter or
11 amend the proposed public offering statement in order to assure
12 full and fair disclosure to prospective purchasers, and a change
13 in the substance of the promotional plan or plan of disposition
14 or development of the subdivision shall not be made after
15 registration without notifying the commission and without making
16 appropriate amendment of the public offering statement. A public
17 offering statement is not current unless all amendments are
18 incorporated.
19 (d) The newspaper, magazine, radio or television advertising
20 of the subdivider shall contain a clear notation that a copy of
21 the current public offering statement may be obtained by writing
22 to the subdivider.
23 Section 18. Taking effect of registration statements and
24 amendments thereto.
25 (a) Except as hereinafter provided, the effective date of a
26 registration statement shall be the 20th day after the filing
27 thereof or such earlier date as the commission may determine,
28 having due regard to the adequacy of the information respecting
29 the subdivider theretofore available to the public, and to the
30 public interest and the protection of prospective purchasers.
19790H0301B3640 - 25 -
1 Whenever an amendment to a statement is filed prior to the
2 effective date of the statement, the registration statement
3 shall be deemed to have been filed when the amendment is filed;
4 except that an amendment filed with the consent of the
5 commission prior to the effective date of the registration
6 statement, or filed pursuant to an order of the commission,
7 shall be treated as a part of the registration statement.
8 (b) Whenever it appears to the commission that a
9 registration statement is on its face incomplete or inaccurate
10 in any material respect, the commission may, after notice by
11 personal service or the sending of confirmed telegraphic notice
12 not later than ten days after the filing of the registration
13 statement, and opportunity for hearing (at a time fixed by the
14 commission) within ten days after such notice by personal
15 service or the sending of such telegraphic notice, issue an
16 order prior to the effective date of registration refusing to
17 permit such statement to become effective until it has been
18 amended in accordance with such order. When such statement has
19 been amended in accordance with such order, the agency shall so
20 declare and the registration shall become effective at the time
21 provided in subsection (a) or upon the date of such declaration,
22 whichever is the later.
23 (c) An amendment filed after the effective date of the
24 registration statement, if such amendment, upon its face,
25 appears to the commission not to be incomplete or inaccurate in
26 any material respect, shall become effective on such date as the
27 commission may determine, having due regard to the public
28 interest and the protection of prospective purchasers.
29 (d) A notice required under this section shall be sent to or
30 served on the subdivider properly directed in the case of
19790H0301B3640 - 26 -
1 telegraphic notice to the address given in such statement.
2 Section 19. Annual report.
3 Within 30 days after each annual anniversary date of an order
4 registering subdivided lands, the subdivider shall file a report
5 in the form prescribed by the rules, regulations and orders of
6 the commission. The report shall reflect all changes in
7 information contained in the original application for
8 registration.
9 Section 20. Registration and regulation of salesmen.
10 (a) A person shall not dispose of or attempt to dispose of
11 subdivided land as a salesman until he is registered with the
12 commission as a salesman: Provided, however, That registration
13 shall not be required of persons who are currently licensed by
14 the Pennsylvania Real Estate Commission as a broker or as a
15 salesman in such a broker's employ where such broker and
16 salesman do not engage in repeated and successive transactions
17 of a similar character on behalf of a subdivider: Provided, That
18 this section shall not apply to salesmen conducting business
19 solely in other states, territories, or countries selling or
20 offering for sale subdivided lands in this State, if such
21 salesman is licensed to make dispositions or offers for
22 dispositions.
23 (b) Each application filed for registration as a salesman
24 shall be accompanied by a filing fee of $25, said fee being
25 nonrefundable. A salesman's certificate issued hereunder shall
26 be renewed annually upon the payment of a fee of $25 on or
27 before January 31.
28 (c) A certificate of registration of a salesman may be
29 suspended for a period of not more than six months or a civil
30 penalty imposed, or both, of not more than $500, after notice
19790H0301B3640 - 27 -
1 and hearing and upon a finding of fact showing that the salesman
2 has:
3 (1) Violated a provision of this section.
4 (2) Directly and knowingly engaged in a false, deceptive
5 or misleading promotion or sales method or made a material
6 misrepresentation for the purpose of offering or disposing of
7 interest in subdivided land.
8 (3) Made statements contrary to the information
9 contained in the approved promotional publications and the
10 current public offering statement.
11 (4) Failed to deliver to a purchaser of registered land
12 a copy of the current public offering statement prior to the
13 execution of a purchase agreement as required by this act.
14 (5) Violated any lawful order, rule or regulation made
15 or issued or promulgated by the commission.
16 (d) The registration of a salesman may be revoked or
17 suspended for a period of not more than one year or a civil
18 penalty imposed, or both, of not more than $1,000 after notice
19 and hearing and upon finding of fact showing that the salesman
20 has:
21 (1) Persisted in doing an act for which his registration
22 could be suspended.
23 (2) Been convicted in a court for a crime involving
24 fraud, deception, false pretense, misrepresentation, or
25 dishonest dealing in a business transaction or of a crime
26 involving moral turpitude.
27 (3) Disposed of, concealed or diverted funds or assets
28 of a purchaser, for his own use and benefit.
29 (4) Failed to account to his employer for funds or
30 assets received from purchasers.
19790H0301B3640 - 28 -
1 (5) Obtained his registration certificate or an order,
2 ruling or authorization by means of fraud, misrepresentation,
3 or concealment of material facts.
4 (e) A certificate of registration of a salesman of
5 subdivided land shall not be issued by the commission until the
6 applicant has demonstrated to the commission's satisfaction, by
7 examination or otherwise, that he is familiar with this act and
8 the rules and regulations of the commission.
9 (f) A person disposing of or attempting to dispose of
10 subdivided land without being registered with the commission, or
11 after having his registration revoked by our commission, shall
12 be guilty of a misdemeanor of the second degree.
13 Section 21. Inactive subdivider.
14 An inactive subdivider shall be required to annually renew
15 his registration until such time as the contract and obligations
16 assumed in the disposition of the subdivided land have been
17 substantially fulfilled, as may be determined by the commission
18 and shall pay such annual registration fee as may be determined
19 by the commission.
20 Section 22. Right of rescission.
21 A buyer PURCHASER signing a contract for the sale of land <--
22 which is regulated by the terms of this act may avoid that
23 contract by notifying, in writing, the seller within three SEVEN <--
24 full business days following the day on which the contract was
25 made. Such notice of rescission shall be effective on
26 depositing same in the United States mail or upon other service
27 which gives the seller notice of rescission. The buyer shall be
28 provided a printed form by the seller which explains the right
29 of rescission and notifies the buyer where the notice shall be
30 directed, and said printed form shall be in such form that it
19790H0301B3640 - 29 -
1 can be returned to the seller as the notice of rescission. Said
2 form shall be printed in at least ten point bold type with the
3 heading "Notice." The period provided for in this section shall
4 not begin to run until the buyer is furnished the name of the
5 seller and the address at which notice to the seller can be
6 given, and the rescission form herein required has been
7 provided. Where a contract is rescinded as provided herein,
8 seller must return to the buyer the full amount of any payment
9 made or consideration given under the contract.
10 Section 23. Waivers.
11 A stipulation or provision purporting to bind a person
12 acquiring subdivided lands to waive compliance with this act or
13 any rule or order under it is void.
14 Section 24. Service of process.
15 (a) In addition to the methods of service provided for in
16 the Rules of Civil Procedure promulgated by the Supreme Court of
17 Pennsylvania, service may be made in the case of a nonresident
18 or foreign corporation, not authorized to conduct its business
19 in this Commonwealth by delivering a copy of the process to the
20 office of the commission, but it is not effective unless the
21 plaintiff (which may be the commission in a proceeding
22 instituted by it):
23 (1) forthwith sends a copy of the process and of the
24 pleading by certified or registered mail to the defendant or
25 respondent at his last known address; and
26 (2) the affidavit of compliance of plaintiff with this
27 section is filed in the case on or before the return day of
28 the process, if any, or within such further time as the court
29 allows.
30 (b) If a person, including a nonresident of this
19790H0301B3640 - 30 -
1 Commonwealth, engages in conduct prohibited by this act or a
2 rule, regulation or order hereunder, and has not filed a consent
3 to service of process and personal jurisdiction over him cannot
4 otherwise be obtained in this Commonwealth, that conduct shall
5 authorize the commission to receive service of process in a
6 noncriminal proceeding against him or his successor which grows
7 out of that conduct and which is brought under this act or a
8 rule, regulation or order hereunder, with the same force and
9 validity as if served on him personally. Notice shall be given
10 as provided in this section.
11 Section 25. Judicial review.
12 A person who is aggrieved by an order of the commission
13 pertaining to registration, a cease and desist order, an order
14 of revocation, or any other final decision of the commission
15 shall be entitled to judicial review as provided by the
16 Administrative Agency Law.
17 Section 26. Restitution.
18 Whenever a court issues a permanent injunction to restrain or
19 prevent violations of this act, the court may in its discretion,
20 direct that the defendant or defendants restore to a person in
21 interest any money or property, real or personal, which may have
22 been acquired by means of a violation of this act, under terms
23 and conditions established by the court.
24 Section 27. Compliance with Department of Environmental
25 Resources.
26 (a) Notwithstanding any provisions to the contrary in this
27 act, a subdivider shall not sell or offer for sale or agree to
28 sell or dispose of any subdivided land or interest therein until
29 the municipality within which the subdivision is located has an
30 official plan or amendment thereto pursuant to the act of
19790H0301B3640 - 31 -
1 January 24, 1966 (1965 P.L.1535, No.537), known as the
2 "Pennsylvania Sewage Facilities Act," which covers the proposed
3 sewage facilities for the subdivision and has submitted to and
4 received approval from the Department of Environmental Resources
5 for plan including an implementation schedule covering the
6 sewage facilities proposed in the official plan or amendment
7 thereto for the subdivision. No implementation plan and schedule
8 shall be approved by the Department of Environmental Resources
9 unless the Department of Environmental Resources is satisfied
10 that adequate financial resources are available to the
11 municipality or municipalities to complete the project.
12 (b) The Department of Environmental Resources may adopt
13 appropriate rules, regulations or orders for the implementation
14 of this section. Nothing stated in this section shall be
15 construed to limit or alter the subdivider's obligations under
16 this act.
17 Section 28. Appropriation SUBDIVIDED LAND SALES FUND. <--
18 (A) THERE IS HEREBY CREATED A SPECIAL ACCOUNT IN THE STATE <--
19 TREASURY, SEPARATE AND APART FROM ALL OTHER PUBLIC MONEYS OF THE
20 COMMONWEALTH, TO BE KNOWN AS THE SUBDIVIDED LAND SALES FUND.
21 THIS FUND SHALL BE THE DEPOSITORY ACCOUNT OF ALL MONEY
22 APPROPRIATED TO THE COMMISSION AND FOR ALL FEES AND PENALTIES
23 COLLECTED UNDER THIS ACT.
24 The sum of $200,000 (B) THE SUM OF $100,000 is hereby <--
25 appropriated to the Subdivided Land Sales Commission for the
26 fiscal year 1978-1979 1981-1982 for the purpose of this act. <--
27 Section 29. Effective date.
28 This act shall take effect in 60 days. JANUARY 1, 1981. <--
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