CHAPTER 468
FORMERLY
HOUSE BILL NO. 810
AN ACT TO AMEND CHAPTER 29, TITLE 24 OF THE DELAWARE CODE RELATING TO THE ADVERTISING, SALE, EXCHANGE OR OTHER DISPOSITION OF REAL ESTATE WHICH IS OFFERED AS PART OF A COMMON PROMOTIONAL PLAN AND WHICH IS LOCATED OUTSIDE THE STATE OF DELAWARE.
Be it enacted by the General Assembly of the State of Delaware:
Section 1. Amend Chapter 29, Title 24 of the Delaware Code, by designating the presently existing sections of said Chapter as new Subchapter I, which shall be entitled:
"SUBCHAPTER I. GENERAL PROVISIONS"
Section 2. Amend §2901, Chapter 29, Title 24 of the Delaware Code, by adding to subsection (a) the following definitions:
"'Disposition of land' or 'disposition' shall mean any sale, exchange, lease, assignment, award by lottery or other transaction designed to convey an interest in a subdivision or in a lot, piece or parcel of land when undertaken for gain or profit.
'Subdivision' shall mean any improved or unimproved land or tract of land including land located outside this State which is divided or proposed to be divided into five or more lots, parcels, unit properties or interests for the purpose of disposition, at any time as part of a common promotional plan. Any land which is under common ownership or which is controlled by a single developer or group of developers acting in concert, is contiguous in area, and is designated or advertised as a common unit or known by a common name, shall be presumed, without regard to the number of lots, parcels, units or interests covered by each individual offering, to be part of a common promotional plan.
Section 3. Amend Chapter 29, Title 24 of the Delaware Code, by adding thereto a new subchapter, designated as Subchapter II, which new subchapter shall read as follows:
"SUBCHAPTER II. OUT-OF-STATE LAND SALES
AND PROMOTIONS
§2940. Promotion or sale of property located outside the State
Except as otherwise provided, no subdivision, lot, parcel, unit or interest in any subdivision located in whole or in part outside the State of Delaware shall in any way be promoted, offered or disposed of within this State by any person or broker until:
(a) such person or broker has appointed in writing the Delaware Secretary of State and all successors in office to be his or its attorney upon whom all process, in any action or proceeding against him or it, may be served, and in such writing such person or broker shall agree that any process against him or it which is served on the said Secretary of State shall be of the same legal force and validity as is served on such person or broker and that such an appointment shall continue in force as long as any liability remains outstanding against such person or broker in this State. Such written appointment shall be acknowledged before an officer authorized to take acknowledgments of deeds, and shall be filed in the office of the Secretary of State. Copies certified by the Secretary shall be sufficient evidence of such appointment and agreement;
() the person or broker has posted with the Commission such bond, in favor of the State, as the Commission may require with surety in such amount as the Commission may in its discretion determine. No bond which may be required shall be accepted for filing unless it is with surety by a company authorized to do business in the State of Delaware. Any person aggrieved by an action in violation of the provisions of this Chapter by the principal named in such bond may proceed against the principal or surety therein, or both, to recover damages; and
(a) until such person or broker has received a 'State Tax License pursuant to §2921, Chapter 29, Title 24 of the Delaware Code. Any person or broker violating the provisions of this section shall be fined not less than one thousand dollars ($1,000.00) nor more than five thousand dollars ($5,000.00) for each offense.
§2941. Initial application
Any person or broker proposing to offer or dispose of any lot, parcel, unit or interest in any subdivision located in whole or in part outside this State shall first submit to the Commission:
(a) such particulars and details of the subdivision, lots, parcels, units, or other interests in any real estate to be offered or to be disposed of as the Commission may by regulation require, including but not limited to a prospectus, property report or offering statement embodying all the terms relative to the offering and disposition;
(b) a completed license application in such form as the Commission may require; and
(c) a filing fee of one hundred dollars ($100.00) for each subdivision or portion of the subdivision to be offered or disposed of.
§2942. Investigations
The Commission shall, prior to issuing any license to any person or broker, fully investigate all information placed before it as may be required and, in addition, it may carry out a physical examination, investigation or inspection of any subdivision which is the subject of the application. All reasonable expenses incurred by the Commission in carrying out such examination, investigation or inspection shall be paid by the applicant and no license shall be issued until such expenses have been fully paid.
§2943. Licensing
The Commission shall, upon completion of its investigation and inspection, but in the absence of any agreement to the contrary between the applicant and the Commission, and in any case not later than three months from the receipt of the completed license application filed with the Commission, approve or disapprove the prospectus, property report or offering statement submitted in accordance with the provisions of this Subchapter, as the case may be, and shall, if satisfied, issue to the applicant a license to offer and dispose of, in this State, the subdivision, parcels, units or other interests which were the subject of the application or such effective statement or record. Such license shall be valid for one year from the date of issuance and thereafter may be renewed annually upon payment to the Commission of a fee of one hundred dollars ($100.00) for each subdivision or portion of a subdivision covered by the license, unless there is a material change affecting such subdivision, lot, parcel, unit, or other interest or in the offer or disposition thereof, in which case all new facts shall be reported to the Commission immediately. Upon receipt of such report or in the event that any such material change is discovered by or comes to the attention of the Commission through other sources, the Commission may, after a hearing, take such action as it considers necessary, including the suspension or revocation of such license if the suspension or revocation is justified.
§2944. Advertising; reference to commission prohibited
No person or broker shall in any manner refer to the Commission or to any member or employee thereof in offering or disposing of any subdivision, lot, parcel, unit or interest in land located outside this State nor make any representation whatsoever that such property has been inspected or approved or otherwise passed upon by the Commission or any official, department or employee of this State. Any person violating the provisions of this section shall be fined not less than one thousand dollars ($1,000.00) nor more than five thousand dollars ($5,000.00).
§2945. Records; revocation
(a) No subdivision, lot, parcel, unit or interest in any subdivision located in whole or in part outside the State of Delaware shall be disposed of except through a resident broker, of this State, provided nothing herein shall be deemed to prohibit any such broker from employing any salesman, on behalf of such broker or under contract to such broker, for the specific purpose of offering or disposing of any lot, parcel, unit or interest in any subdivision. Prior to any such offering or disposition, the name of the resident broker and the out-of-state salesman shall be placed on file with the Commission.
(b) A clearly identified copy of the prospectus, property report or offering statement on file with the Commission shall be given to each person purchasing land under provisions of this Subchapter by the broker or salesman prior to the execution of any contract for the disposition of any such property. The broker or salesman shall obtain from the purchaser a signed receipt for a copy of such prospectus, property report or offering statement and, if a contract for disposition shall be entered into, the receipt shall be kept in the broker's files for a period of seven years and shall be subject to inspection by the Commission.
(c) Any contract or agreement for the disposition of any subdivision, lot, parcel, unit or interest in any real estate located in whole or in part outside the State of Delaware, not exempt under the provisions of §2949 where the prospectus, property report or offering statement has not been given to the purchaser more than seventy-two hours in advance of his signing such contract or agreement, may be revoked by the purchaser within seventy-two hours after he has signed the same or after receipt by him of such prospectus, property report or offering statement whichever is later, and the contract or agreement shall so provide, except that the contract or agreement may stipulate that the foregoing revocation authority shall not apply in the case of a purchaser who:
(1) has received the prospectus, property report or offering statement and inspected the real estate involved in advance of signing the contract or agreement; and
(2) acknowledges by his signature that he has made such inspection and has read and understood the prospectus, property report or offering statement.
Any such revocation shall be in writing in a form approved by the Commission and shall be communicated to the broker within the time specified by this section. All moneys paid by the purchaser under such revoked contract or agreement shall be returned to him immediately by the broker, without any deductions.
§2946. Deposits
All moneys paid or advanced by a purchaser or lessee or prospective purchaser or prospective lessee which pertain to any lot, parcel, unit or interest in any subdivision, the disposition of which is controlled by this Chapter, or such portion thereof as the Commission may determine is sufficient for the protection of the interests of such purchaser or lessee shall be deposited by the broker, seller or lessor in an escrow account, approved by the Commission, in a bank doing business within the State of Delaware. Such money shall remain in such escrow account until:
(a) a proper and valid release is obtained for such money; or
(b) the owner or subdivider or the purchaser or lessee has defaulted under the contract for sale or lease and a court of competent jurisdiction has made a determination as to the 'disposition of such money; or
(c) the owner, subdivider, seller or lessor orders the return of such money to such purchaser or lessee.
§2947. Suspension or revocation of license
Any broker or real estate salesman violating any provision of this Act, in addition to any other penalty imposed by any section herein and subject to the provisions of Chapter 29, Title 24 of the Delaware Code, shall have his real estate broker's or real estate salesman's license suspended or revoked by the Commission for such time as the Commission considers justified in light of the circumstances of the case.
§2948. Non-Liability of advertising media
The owner, publisher, licensee or operator of any newspaper, magazine, sound or visual broadcasting station or network of stations or the agents or employees of any such owner, publisher, licensee or operator shall not be liable for any advertising concerning any subdivision, lot, parcel, unit or interest in real estate which is subject to the provisions of this Chapter, nor shall such owner, publisher, licensee or operator or their agents or employees be liable under the provisions of this Chapter for the contents of any such advertisement.
§2949. Exemptions
(a) Unless a method of disposition is adopted for the purpose of evading the provisions of this Subchapter, or the provisions of the Federal Interstate Land Sales Full Disclosure Act, said sections shall not apply to the making of any offer or disposition of a: subdivision, lot, parcel, unit or interest therein:
(1) by a purchaser of any subdivision, lot, parcel, unit or interest thereof for his own account in a single or isolated transaction;
(2) to any person who is engaged in the business of the construction of residential, commercial or industrial buildings, except a lot, parcel, unit or interest in any 'subdivision' as defined by §2901 of this Chapter;
(3) pursuant to the Order of any Court in this State;
(4) by any government or governmental agency;
(5) or to any offer or disposition of any evidence of indebtedness secured by way of any mortgage or Deed or Trust;
(6) or to securities or units of interest issued by an investment trust regulated under the laws of this State;
(7) to cemetery lots;
(8) to the leasing of apartments, offices, stores, or the leasing of similar space within any apartment building, commercial building or industrial building.
(b) The Commission may, from time to time, pursuant to rules and regulations legally issued by it, exempt any subdivision from the provisions of this Subchapter if the Commission finds that the enforcement of a section with respect to such subdivision is not necessarily in the public interest and the protection of purchasers by reason of the small amount involved, or the limited character of the offering.
§2950. Appeals
Any person aggrieved by any action, decision, order or regulation of the Commission may appeal in the manner prescribed by Chapter 29, Title 24 of the Delaware Code."
Section 3. The Commission shall, after public hearing and not later than ninety days after signature by the Governor, promulgate such rules and regulations as it shall deem necessary for the carrying out and enforcement of the provisions of this Act, which rules and regulations shall be in the best interests of the general public. The Commission may, from time to time and after public hearing, promulgate such further regulations as are necessary.
Approved July 17, 1974.