§ 338. Inspection power of department of state; unlawful practices;\npenalties. 1. The department of state may cause an investigation and an\ninspection to be made of any subdivision of vacant land proposed to be\noffered for sale or lease in this state pursuant to this article and may\nmake a report of its findings thereon.\n 2. Where an inspection is to be made of subdivided lands, situated\noutside of the state of New York and being offered for sale in this\nstate, the statement required by section three hundred thirty-seven-a\nshall be accompanied by the filing fee and in addition there shall be\nremitted to the department of state an amount equivalent to the cost of\ntravel from New York to the location of the project and return, as\nestimated by the department of state, and a further amount estimated to\nbe necessary to cover the additional expenses of such inspection, not to\nexceed fifteen dollars a day, for each day consumed in the examination\nof the project.\n 3. It shall be unlawful for the subdivider or his or its agent, to\nchange the financial structure of such offering after the submission\nthereof to the department of state without first notifying the\ndepartment in writing of such intention.\n 4. Where the vacant lands to be subdivided shall be subject to a lien\nor encumbrance securing or evidencing the payment of money other than\ntaxes or assessments levied by public authority, or where the interest\nof the owner and subdivider or his or its agent be held under option or\ncontract of purchase or in trust, it shall be unlawful to sell any\nvacant land in such subdivision unless provision in such lien,\nencumbrance, option, contract or trust agreement, or in an agreement\nsupplementary thereto, enables the vendor to convey valid title to each\nparcel so sold or leased free of such lien, encumbrance, option,\ncontract or trust agreement, upon completion of all payments and\nperformance of all the terms and conditions required to be made and\nperformed by the vendee under the agreement of sale. Where the\nconsideration price for the lot or lots sold has been amortized to an\nextent that the balance due and owing thereunder equals in an amount\nrequired to release such lot or lots from any existing lien,\nencumbrance, tax, assessment, option contract or first agreement, and\nthe initial cost for said vacant land has not been paid for by the owner\nor subdivider, that in such event all moneys thereafter received by the\nowner or subdivider from the purchaser of said lot or lots shall be\nsegregated and kept in a separate account and be impressed with a trust\nwhich shall be applied towards the clearance of title to the vacant land\nthereafter intended to be conveyed to the purchaser. After default\nshall have occurred in the payment of any tax or assessment levied and\nassessed against the premises or after default shall have occurred under\nand pursuant to the terms of any contract, mortgage lien, charge or\nencumbrance, all moneys received by the owner or subdivider from the\npurchaser of said lot or lots shall be segregated and kept in a separate\naccount and be impressed with a trust which shall be applied towards the\nclearance of title to the vacant land thereafter intended to be conveyed\nto the purchaser. Certified or verified copies of documents containing\nsuch provisions shall be filed with the department of state prior to the\nsale or lease or offer of sale or lease of any part of the subdivision.\n 5. (a) Every person, officer, director, agent or employee of a\ncompany, partnership, association or corporation who or which knowingly\noffers to sell or to lease, or sells or leases subdivided lands prior to\nthe filing of the offering statement and the verified statement required\nby this article shall be guilty of a felony.\n (b) Except as provided in subdivision (a) hereof, every person,\nofficer, director, agent or employee of a company, partnership,\ncorporation, or association who or which k
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