- WHO MUST FILE UNDER ARTICLE 9-A OF THE REAL PROPERTY LAW?
- WHAT IS CONTAINED IN A FILING UNDER ARTICLE 9-A OF THE REAL PROPERTY LAW?
- 997 CHANGES TO ARTICLE 9-A OF THE REAL PROPERTY LAW
- Additional Statements
- Right to Cancel
Article 9-A of the New York State Real Property Law (RPL) was enacted to help prevent New York State residents from being victimized by fraudulent practices in connection with certain types of sales or leases of subdivided vacant lands. 1960 N.Y. Op. Atty. Gen. No. 65. The type of transactions and lands subject to Article 9-A are narrowly defined by statute. RPL § 337. The Article, however, lays out a remedial process that was intended to be liberally construed. Id.
The information disclosure and filing requirements of Article 9-A are triggered when all of the following underlined elements are present in a given situation. Before offering to sell or lease subdivided vacant lands on an “installment plan” to New York State residents, a “subdivider,” must file a “Filing Statement” and an “Offering Statement” with the New York State Department of State. RPL §§ 337(2),(3); 337-a; and 337-b. In addition, a minimum filing fee of seven hundred fifty dollars must accompany the filing, and when the number of lots being offered exceeds seventy-five, an additional ten dollars per each lot over seventy-five must be added to the minimum filing fee. RPL § 339.
If the above elements are met, filings are required regardless of where the subdivided lands are located and where the offer is made. This requirement has often been a source of confusion for subdividers. This memorandum attempts to reduce confusion by focusing on two issues: who must file under Article 9-A, and what must be contained in a filing which is required to be made by Article 9-A.
WHO MUST FILE UNDER ARTICLE 9-A OF THE REAL PROPERTY LAW?
Every “subdivider,” as defined in § 337(2) of Article 9-A, must file with the Department of State. The term “subdivider” means every person, partnership, corporation, company or association which sells, leases, or offers to sell or lease subdivided vacant lands on an installment plan to New York State residents.
Several important points are to be noted. First, Article 9-A applies only if the offered land is vacant. If the offering consists of lots on which homes have been built, no filing with the Department of State is required. However, lots on which homes have been built may be required to be registered with the New York State Office of the Attorney General, Real Estate Finance Bureau: 28 Liberty Street, 15th Floor, New York, New York 10005; (212) 416-8179; www.ag.ny.gov/bureau/real-estate-finance-bureau.
A second point to note is that Article 9-A applies only if subdivided vacant land is offered for sale or lease on an installment plan. Real Property Law § 337(1) indicates that Article 9-A applies both to lands situated in New York State that are sold on an installment plan, and to lands situated outside of New York State that are sold on an installment plan or any other plans, terms, and conditions of sale. However, the provision requiring the registration of plans “other than installment plans" aimed at just lands located outside of New York State was found by the United States District Court for the Northern District of New York to discriminate against interstate commerce in Cranberry Hill Corporation v. Shaffer, 629 F.Supp. 628 (1986). The Court in Cranberry Hill enjoined the Department of State from requiring filings from subdividers, who intend to sell subdivided lands located outside of New York State, by any method other than an installment plan. As such, filings with this Department are required only when subdivided vacant land is offered for sale or lease to New York State residents on an installment plan, regardless of whether the land is situated inside or outside of the State.
“Installment plan” means an agreement to make periodic payments before title is transferred. An installment plan exists if a purchaser or lessee must make at least two installment payments before receiving a deed or lease. “Deed and mortgage” transactions, which may require a single or multiple down payments, are not included in this definition. Deed and mortgage transactions involve a deed being transferred at the same time that a mortgage is executed at a closing, which usually occurs after the signing of a contract that required a single down payment. Deed and mortgage transactions are the most common method of real estate transfers.
For the above-noted reasons, most real estate offerings are not required to be filed with the Department of State.
WHAT IS CONTAINED IN A FILING UNDER ARTICLE 9-A OF THE REAL PROPERTY LAW?
If a filing is required under Article 9-A, it consists of a Filing Statement, an Offering Statement, and payment of the statutory fee.
All “subdividers” are required by § 337-a(c) of the Real Property Law to file a Filing Statement with the Department of State. An electronic Filing Statement form is available here; or may be obtained by calling the Subdivided Lands Section at (518) 474-6740, sending a fax to the Subdivided Lands Section at (518) 473-9211, or writing to the Department of State, Subdivided Lands Section, One Commerce Plaza, 99 Washington Avenue, Suite 1120, Albany, New York 12231.
The requirements for Offering Statements were simplified in February 1996. Most Offering Statements now consist of less than two typewritten pages. The requirements for Offering Statements are found in Section 135.2 of Part 135 of Title 19 of the New York Code of Rules and Regulations.
The fee for subdivided lands filings is $750, plus an additional $10 for each lot offered in excess of 75 lots.
1997 CHANGES TO ARTICLE 9-A OF THE REAL PROPERTY LAW
Chapter 658 of the Laws of 1997 was signed by the Governor on September 24, 1977. Chapter 658 made three significant changes to Article 9-A of the Real Property Law. A summary of these changes follows.
The requirement that advertisements for the sale or lease of subdivided lands be filed with the Department of State and a fee paid therefore was repealed by Chapter 658 of the Laws of 1997. Since then, advertisements must only state that: an Offering Statement has been filed with the New York State Department of State; a copy of such statement is available from the subdivider upon request; and the filing of a Filing Statement and an Offering Statement with the Department of State does not constitute approval of the sale or lease, or offer for sale or lease, of subdivided lands by the Department of State or any officer thereof, or that the Department of State has in any way passed upon the merits of such filing. The Department of State has developed a model statement for inclusion in advertisements.
Chapter 658 of the Laws of 1997 added a requirement that all Offering Statements include a statement indicating that additional information on the land offering has been filed with the Department of State. The filed information includes maps of the properties being offered, a statement of liens on the land, and statements of any prior criminal convictions of the principals making the offering that involves subdivided lands. The statement must also indicate that the filed information is available from the Department of State pursuant to the Freedom of Information Law.
Right to Cancel
Finally, Chapter 658 of the Laws of 1997 added a requirement that every contract or agreement for the sale or lease of subdivided lands expressly grant to the purchaser or lessee the absolute right to cancel the contract or agreement within seven days following its signing. This right is exercised when the purchaser or lessee gives the subdivider notice of cancellation by registered or certified mail, return receipt requested, at the address listed by the subdivider in the offering statement. The subdivider has 10 days from the receipt of a notice of cancellation to return all payments made on the contract or lease. The Department of State has developed a model statement concerning the right to cancel.
If you need further information, please call the Subdivided Lands Section at (518) 474-6740, send a fax to (518) 473-9211, or write to the Department of State, Subdivided Lands Section, One Commerce Plaza, 99 Washington Avenue, Suite 1120, Albany, New York 12231.
The Secretary of State is authorized to provide assistance to local governments and general information to the public pursuant to New York State Executive Law, Article 6-B. The information in this Memorandum is provided pursuant to that authorization, but is informal only and should not be construed as providing legal advice. Local governments and other persons or entities should consult with their own legal counsel for legal advice.
Updated: March 2021