565.818 Material used to induce prospective purchasers to visit the subdivision, contents; developer's participation in campaign, disclosure, assurances that obligations can be met

Sec. 18. The director may require that any material used by a developer or his agent to induce prospective purchasers to visit the subdivided land contain certain additional pertinent information. The information may include but is not limited to, terms and conditions of the offers and the nature and extent of the developer's participation in the campaign. The director may require reasonable assurances that such obligation incurred by a developer or its agents can be met.

565.819 Rules, promulgation, contents

Sec. 19. The department shall promulgate rules in accordance with and subject to Act. No. 306 of the Public Acts of 1969, as amended, being sections 24.201 to 24.315 of the Compiled Laws of 1948. The rules shall include but need not be limited to:

(a) Provisions for advertising standards to assure full and fair disclosure.

(b) Provisions for escrow or trust or trust agreement or other means reasonably to assure that all improvements referred to in the application for registration and advertising will be completed and that purchasers will receive the interest in land contracted for and full and fair disclosure in the property report informing the purchaser.

(c) Provisions for operating procedures.

(d) Provisions requiring instruments to be executed in recordable form.

(e) Provisions relating to apportionment of taxes.

(f) Other rules necessary and proper to accomplish the purpose of this act.

565.820 Investigations of subdivisions, necessity, extent, form, expenses, waiver

Sec. 20. The department shall investigate every subdivision offered for disposition in this state and may:

(a) Rely upon any relevant information concerning subdivided lands obtained from the federal housing administration, the United State veterans administration or any other federal agency having comparable duties in relation to subdivision of real estate.

(b) Accept registrations filed in other states or with the federal government and cooperate with similar agencies in other jurisdictions to establish uniform filing procedures and forms, uniform property reports, advertising standards, rules and common administrative practices. If a statement of record has been filed with and the property report accepted by the federal office of interstate land sales, and department may accept a copy of that statement of record and property report as part of the disclosure requirements under this act and accept an addendum to the statement of record and property report which shall satisfy the additional requirements of this act.

(c) Require the applicant to submit reports prepared by registered or licensed engineers as to any hazard to which any subdivision offered for disposition is subject in the opinion of the department, or any other factor which affects the utility of lots, units, parcels or interests within the subdivision and require evidence of compliance to remove or minimize all hazards stated by competent engineering reports.

(d) Make an on site inspection of each subdivision prior to its registration and periodic on site inspections thereafter. The developer shall defray all actual and necessary expenses incurred by the inspector in the course of the inspection.

(e) Require the developer to deposit with the department the expenses to be incurred in any inspection or reinspection, in advance, based upon an estimate by the department of the expenses likely to be incurred.

(f) Where an on site inspection of any subdivision has been made under this act, an inspection of a subsequent application for registration of contiguous land may be waived and an inspection thereof shall be made at the time of the next succeeding on site inspection. 565.821 Contracts for disposition of subdivided land, contents

Sec. 21. Every contract for disposition of subdivided land shall state clearly the legal description of the lot, unit, parcel or interest disposed of and shall contain disclosures as required by the federal truth in lending act, Public Law 90-321, and the rules promulgated thereunder.

565.822 Penalty for failure to pay registration and inspection fees, amount, grounds for imposition, collection; suspension or revocation of registration, unpaid

fe es

Sec. 22. Any developer who fails to pay when due, after written notice by the department,

the registration and inspection fees provided in this act and continues to dispose of or offers to dispose of subdivided lands, is liable civilly in an action brought by the attorney general on behalf of the department for a penalty in an amount equal to treble the unpaid fees. The department may suspend or revoke a registration for which any application or inspection fee provided in this act is unpaid, after written notice by the department.

565.823 Investigations, authorization, extent, purpose, statements, oaths, subpoenas, proceedings

Sec. 23 (1) The department may:

(a) Make necessary public or private investigations within or outside of this state to determine whether any person has violated or is about to violate this act or any rule or order hereunder or to aid in the enforcement of this act or in the prescribing of rules and forms bereunder.

(b) Require or permit any person to file a statement in writing, under oath or otherwise as the department determines, as to all the facts and circumstances concerning the matter to be investigated.

(2) For the purpose of any investigation or proceeding under this act, the department or any officer designated by rule may administer oaths or affirmations, and upon its own motion or upon request of any party may subpoena witnesses, compel their attendance, take evidence, and require the production of any matter which is relevant to the investigation, including the existence, description, nature, custody, condition and location of any books, documents or other tangible things and the identity and location of persons having knowledge of relevant facts, or any other matter reasonably calculated to lead to the discovery of material evidence. (3) Upon failure to obey a subpoena or to answer questions propounded by the investigating officer and upon reasonable notice to all persons affected thereby, the department may apply to the circuit court of Ingham county for an order compelling compliance.

(4) Except as otherwise provided in this act, all proceedings under this act shall be in accordance with Act. No. 306 of the Public Acts of 1969, as amended.

565.824 Cease and desist orders and orders to take affirmative action, grounds for issuance; temporary cease and desist orders, notice, hearing

Sec. 24. (1) The department may issue an order requiring a person to cease and desist from the unlawful act and to take such affirmative action as in the judgment of the department will carry out the purposes of this act, if it determines, after notice and hearing, that a person has done any of the following:

(a) Violated any provision of this act.

(b) Directly or through an agent or employee knowingly engaged in any false, deceptive or misleading advertising, promotional or sales methods to offer or dispose of an interest in subdivided lands.

(c) Made any substantial change in the plan of disposition and development of the subdivided lands subsequent to the order of registration without. obtaining prior written approval from the department.

(d) Disposed of any subdivided lands which have not been registered with the department. (e) Violated any lawful order or rule of the department.

(2) If the department makes a finding of fact in writing that the public interest will be irreparably harmed by delay in issuing an order, it may issue a temporary cease and desist order. Prior to issuing the temporary cease and desist order, the department whenever possible by telephone or otherwise shall give notice of the proposal to issue a temporary cease and desist order to the person. Every temporary cease and desist order shall include in its terms a provision that upon request a hearing will be held within 30 days to determine whether or not it becomes permanent.

565.825 Revocation of registration, notice, hearing, grounds; findings of fact, necessity, statement of underlying facts; cease and desist order as alternative

Sec. 25. (1) A registration may be revoked after notice and hearing upon a written finding of fact that the developer has done any of the following:

(a) Failed to comply with the terms of a cease and desist order.

(b) Been convicted in any court subsequent to the filing of the application for registration of a crime involving fraud, deception, false pretenses, misrepresentation, false advertising or dishonest dealing in real estate transactions.

(c) Disposed of, concealed or diverted any funds or assets of any person so as to defeat the rights of subdivision purchasers.

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(d) Failed faithfully to perform any stipulation or agreement made with the department as an inducement to grant any registration, to reinstate any registration or to approve any promotional plan or property report.

(e) Made intentional misrepresentations or concealed material facts in an application for registration.

(2) Findings of fact, if set forth in statutory language, shall be accompanied by a concise and explicit statement of the underlying facts supporting the findings.

(3) If the department finds after notice and hearing that the developer is guilty of a violation for which revocation could be ordered, it may issue a cease and desist order instead.

565.826 Injunctions, grounds; receivers; conservators; bonds

Sec. 26. If it appears that a person has engaged or is about to engage in an act or practice constituting a violation of this act or a rule or order hereunder, the department, with or without prior administrative proceedings, may bring an action in circuit court of Ingham county to enjoin the acts or practices and to enforce compliance with this act or any rule or order hereunder. Upon proper showing, injunctive relief or temporary restraining orders shall be granted and a receiver or conservator may be appointed. The department is not required to post a bond in any court proceedings.

565.827 Offenses, enumeration, penalties

ог

Sec. 27. Every developer or agent of a developer who authorizes, directs, or aids in the publication, advertisement, distribution, or circularization of a false statement misrepresentation, made with knowledge of its falsity, concerning a subdivision offered for disposition or who knowingly fails to comply with the terms of a final cease and desist order and every person with knowledge that an advertisement, pamphlet, prospectus, or letter concerning a subdivision contains any written statement that is false or fraudulent, who issues, circulates, publishes, or distributes the same or causes the same to be issued, circulated, published, or distributed or who knowingly fails to comply with the terms of a final cease and desist order, is guilty of a felony and may be fined not more than $25,000.00, or imprisoned not more than 10 years, or both. Each violation constitutes a separate offense. 565.828 Other violation, penalties

Sec. 28. Any violation of this act other than as provided in section 27 is a misdemeanor and every violator may be fined not more than $2,000.00 or imprisoned for not more than 90 days, or both, for each offense.

565.829 Service of process, methods, nonresidents

Sec. 29. (1) In addition to the methods of service provided for in any other provision of law, service may be made by delivering a copy of the process to the office of the department if the plaintiff, which may be the department in a proceeding instituted by it, does both of the following:

(a) Sends a copy of the process and of the pleading by registered mail to the defendant or respondent at his last known address.

(b) Files its affidavit of compliance with this section in the case on or before the return day of the process or within such time as the court allows.

(2) If any person, including any nonresident of this state, engages in conduct prohibited by this act, or any rule or order and has not filed a consent to service of process and personal jurisdiction over him cannot otherwise be obtained in this state, the conduct authorizes the department to receive service of process in any noncriminal proceeding against him or his successor which grows out of the conduct and which is brought under this act or any rule or order hereunder, with the same force and validity as if served on him personally. Notice shall be given as provided in subsection (1).

565.830 Registration fee, time for payment, amount; annual renewal fee; inspection expenses, payment

Sec. 30. (1) Except as provided in subsection (2), a registration fee shall be paid with the application for registration and shall be set by rule which shall provide a basic fee of $250.00, plus an additional fee of not more than $50.00 for each 50 lots, units, parcels or interests included in the offering.

(2) A registration fee shall be paid with the filing of an application for registration consolidating additional lots with a prior registration and shall be set by rule which shall provide a basic fee of $200.00, plus an additional fee of not more than $50.00 for each 50 lots, units, parcels or interests included in the offering.

(3) A fee shall not be charged for amendments to the property report as a result of

amendments to the initial filing, unless the department determines the amendments are made for the purpose of avoiding the payment of a fee, in which event the amendment may be treated as an application for registration consolidating additional lots with a prior registration. (4) A fee not to exceed $25.00 shall be paid with each submission of advertising for approval.

(5) In addition to the payment of inspection expenses as provided in section 20, an annual renewal fee set by rule shall be paid.

565.831 Deceptive acts or false statements and omissions, liability to purchaser; joint and several liability; contribution; tender of reconveyance, time; limitation of actions Sec. 31. (1) A person who disposes of subdivided lands in violation of section 6 or who, in disposing of subdivided lands engages in a deceptive act or practice, makes an untrue statement of a material fact or omits a material fact required to be stated in a registration statement or property report or necessary to make the statements made not misleading, is liable as provided in this section to the purchaser unless in the case of an untruth or omission it is proved that the purchaser did not rely on the untruth or omission.

(2) In addition to any other remedies, the purchaser under subsection (1) may recover the consideration paid for the lot, parcel, unit, or interest in subdivided lands together with interest at the rate of 6% per year from the date of payment, property taxes paid, costs and reasonable attorneys' fees, less the amount of any income received from the subdivided lands, upon tender of appropriate instruments of reconveyance. If the purchaser no longer owns the lot, parcel, unit, or interest in subdivided lands, he may recover the amount that would be recoverable upon a tender of a reconveyance, less the value of the land when disposed of and less interest at the rate of 6% per year on that amount from the date of disposition.

(3) Every person who directly or indirectly controls a subdivider liable under subsection (1), every general partner, officer, or director of a subdivider, every person occupying a similar status or performing a similar function, every employee of the subdivider who materially aids in the disposition and every agent who materially aids in the disposition is also liable jointly and severally with and to the same extent as the subdivider, unless the person otherwise liable sustains the burden of proof that he did not know and in the exercise of reasonable care could not have known of the existence of the facts by reason of which the liability is alleged to exist. There is a right to contribution as in cases of contract among persons so liable.

(4) Every person whose occupation gives authority to a statement which with his consent has been used in an application for registration or property report, if he is not otherwise associated with the subdivision and development plan in a material way, is liable only for false statements and omissions in his statement and only if it is proved he knew or reasonably should have known of the existence of the true facts by reason of which the liability is alleged to exist. However, if the person is a registered professional licensed by this state whose statement was part of his representation of another person in rendering professional services, liability hereunder shall not exceed that resulting from a duty to exercise a reasonable degree of care and skill ordinarily possessed and exercised by members of that profession similarly situated.

(5) A tender of reconveyance may be made at any time before the entry of judgment. (6) An action shall not be commenced pursuant to this section later than 3 years from the time performance of all promises, statements, or representations contained in any registration statement, property report, purchase agreement, contract, option, or other evidence of a disposition of subdivided lands is to be completed. Where the cause of action arises out of any deceptive act or practice or the omission to state a material fact, the action shall be commenced no later than 3 years from the date the person discovers or should have reasonably discovered the deceit or omission. An action shall not be commenced by a purchaser more than 6 years after the sale or lease to the purchaser. 565.832 Subdivided lands within state, subdivider's principal office in state, or offer or disposition of subdivided lands made in the state, applicability of act, jurisdiction of circuit courts

Sec. 32. Dispositions of subdivided lands are subject to this act and the circuit courts of this state have jurisdiction in claims or causes of action arising under this act, in the following

cases:

(a) The subdivided lands offered for disposition are located in this state.

(b) The subdivider's principal office is located in this state.

(c) Any offer or disposition of subdivided lands is made in this state, whether or not the offeror or offeree is then present in this state, if the offer originates within this state or is directed by the offeror to a person or place in this state and received by the person or at the place to which it is directed.

565.833 Repealed by P.A. 1973, No. 184, § 2, Imd. Eff. Jan. 3, 1974

This section, added by P.A. 1972, No. 286, § 33, contained a saving clause applicable to preexisting registration and allowed 90 days for the effecting of the consolidation of prior registrations.

565.834 Condominiums

Sec. 34. No portion of this act shall have any effect on or take precedence over the application and enforcement within the state of Act No. 229 of the Public Acts of 1963, as amended, being sections 559.1 to 559.31 of the Compiled Laws of 1948.

565.835 Effective date

Sec. 35. The provisions of this act shall take effect October 1, 1973, except that section 19 shall take effect April 1, 1973 and the department shall make available such rules, and all necessary forms and instructions for and may accept and process applications for registration, applications for approval of exemption, applications for approval of advertising and applications for consolidation of registrations and may make examinations, investigations, and conduct inquiries incident to such applications prior to October 1, 1973 so that persons regulated by the act can be in compliance therewith on October 1, 1973.