DEPARTMENT OF CONSUMER AND INDUSTRY SERVICES

              BUREAU OF CORPORATIONS, SECURITIES AND LAND DEVELOPMENT
   
                       MOBILE HOME AND LAND RESOURCES DIVISION

                                      LAND SALES


(By authority conferred on the department of commerce by section 19 of Act
No. 286  of  the  Public  Acts  of  1972,  as   amended,   and   Executive
Reorganization  Order  No. 1980-1,  being  SS565.819  and  16.732  of  the
Michigan Compiled Laws)


                        PART 1. GENERAL PROVISIONS


R  338.3201   Definitions; A.
  Rule 1. (1) As used in these rules:
  (a) "Act" means Act No. 286 of the Public  Acts  of  1972,  as  amended,
being S565.801 et seq. of the Michigan Compiled Laws.
  (b)  "Advertising  material"  means  any  of  the  following  forms   of
communication which is addressed to,  or  intended  for  distribution  to,
prospective subscribers or purchasers and which is not excepted  from  the
definition of "advertising" in section 2(a) of the act:
  (i) A pamphlet.
  (ii) A circular.
  (iii) A form letter.
  (iv) A fact sheet.
  (v) A sign.
  (vi) A radio, television, or telephone presentation, including  a  radio
or television script.
Multiple listing books and other publications, the distribution  of  which
is restricted to real estate brokers and salesmen licensed  by  the  state
and their employees, shall not be considered to  be  "advertising"  within
the meaning of the act or these rules, unless such publications are  being
used for the purposes of evading the act or these rules.
  (c)  "Advertising  submission"  means  a  single  piece  of  advertising
material as defined in subdivision (b) of this subrule.
  (2) As used  in  section  4(k)  of  the  act,  "amenities"  means  those
features, other than unimproved natural  attributes  of  common  property,
which are provided by the developer and which are not  necessary  for  the
use of the lots, parcels, units, or interests in the subdivided land.
  (3) Terms defined in the act have the same meanings when used  in  these
rules.

  History:  1979 AC; 1990 AC.


R  338.3202   Definitions; I to S.
  Rule 2. (1) "Interest in land" includes a certificate  of  participation
in, interest in, share, membership in a corporation, profit or  nonprofit,
whose  purpose  is  to  develop  or  make  available  real  property   and
improvements thereto for recreational, vacation or second home site unless
such interest,  certificate  of  participation,  share  or  membership  is
registered and in compliance with Act No. 265 of the Public Acts of  1964,
as amended, being SS451.501 to 451.818  of  the  Michigan  Compiled  Laws,
unless such interest, certificate of participation,  share  or  membership
plan is adopted for the purpose of evasion of the act.
  (2) "Person authorized to appear  to  represent  a  developer"  means  a
person who is an employee of a developer, the developer, his agent  or  an
attorney at law who files an appearance on behalf of a developer.
  (3) "Subdivision" and "subdivided lands" includes  condominium  projects
consisting of 10 or more units and any portion thereof not included within
the terms of Act No. 229 of the Public Acts of  1963,  as  amended,  being
SS559.1 to 559.31 of the Michigan Compiled Laws.

  History:  1979 AC.


R  338.3204   Documents.
  Rule 4. (1) A  document  to  be  filed  with  the  department  shall  be
typewritten or in legible handwriting on 1 side of  the  paper  only.  One
copy of each exhibit or document shall be submitted, unless  the  director
requires more than 1 copy. A document shall be reduced or folded to a size
not to exceed 8 1/2 by 13 inches. All papers filed pursuant to these rules
shall become part of the department's records.
  (2) The  use  of  verified  photographs  as  part  of  documentation  is
permitted, except that the photographs shall not be permitted in  lieu  of
proper legal descriptions of  real  property  or  other  required  written
documents.
  (3) The use of verified copies of original documents is permitted.
  (4) An affidavit or affirmation as prescribed in  the  department  forms
shall be executed for  each  of  the  following  documents;  statement  of
record;  partial  statement   of   record;   consolidation   registration;
registration  amendment;  annual  registration  renewal;  application  for
advertising approval; partner, officer, director or principal  disclosure;
consent to service to process; and broker's application.

  History:  1979 AC.


R  338.3206   Fees.
  Rule 6. The following  fees  shall  accompany  documents  submitted  for
filing:
  (a) Registration fee of $250.00 plus $1.00 for each lot, unit, parcel or
interest included in the application.
  (b) Consolidation registration  fee  of  $200.00  plus  $1.00  for  each
additional  lot,  unit,  parcel  or  interest  added   to   the   original
application.
  (c) Annual registration renewal fee of $100.00 plus 25  cents  for  each
lot, unit, parcel or interest included in the application.
  (d) Advertising submission fee of $15.00 for each submission, which  was
not submitted with an original registration  or  a  consolidation,  except
that a fee for a classified ad of 2 column inches  or  less  shall  be  25
cents.

  History:  1979 AC.


R  338.3208   Address of director.
  Rule 8. The official address of the director for delivery and receipt of
all mail, telegrams, information, filing, registration, and other material
required by the act or these rules is as follows:

                      Michigan Department of Commerce

                      Corporation & Securities Bureau

                            6546 Mercantile Way

                              P.O. Box 30222

                          Lansing, Michigan 48909

  History:  1979 AC; 1990 AACS.

R  338.3218   Modification of rules.
  Rule 18. The director, in order to achieve the purpose intended  by  the
act, may add to, waive,  modify  or  otherwise  condition  or  change  any
requirement  created  by  these  rules  in  case  of  particular   factual
circumstances.

  History:  1979 AC.


R  338.3219   Rescission of emergency rules.
  Rule 19. The emergency rules promulgated by  the  department  and  filed
with the secretary of state on April 26, 1973, are rescinded.

  History:  1979 AC.


R  338.3220   Amendment to comply with rules.
  Rule 20. (1) An application for  registration  for  which  a  notice  of
filing has not been issued by the effective date of these rules  shall  be
amended to comply with these rules.
  (2) Registrations in effect on the effective date of these  rules  shall
be amended upon  a  consolidation  registration  or  the  annual  renewal,
whichever comes first.

  History:  1979 AC.

                      PART 2. EXEMPTIONS FROM THE ACT


R  338.3221   Statutory exemptions.
  Rule 21. Except as  otherwise  provided  by  rules  promulgated  by  the
department as authorized by the act, the act shall not apply to offers  or
dispositions of interests in land specified in sections 4 and 5 of the act
unless the method of disposition is adopted for the purpose of evading the
act.

  History:  1979 AC.

            PART 3. REGISTRATION OF NONEXEMPT SUBDIVIDED LANDS

R  338.3231   Statements of record  and  property  reports;  contents  and
  filing.
  Rule 31. (1) A developer shall apply for  a  registration  of  nonexempt
subdivided land by means of a statement of record and property  report  in
accordance with the act and this part.
  (2) A statement of record shall be made on  the  form  supplied  by  the
department. A property report shall be  in  the  form  prescribed  by  the
department. They shall be fully executed.
  (3) A statement of record and property report shall include, but not  be
limited to, the information required by sections 6 to 10 of the  act.  The
property report shall include on its face the  following  language  in  12
point bold capital type:

        "THE DEVELOPER DOES NOT DISCRIMINATE ON THE BASIS
        OF RACE, COLOR, RELIGION, SEX OR NATIONAL ORIGIN IN
        THE OFFER TO SELL, SALE, FINANCING OR OTHER DISPO-
        SITION OF LAND INCLUDING THE MAKING AVAILABLE OF
        ALL IMPROVEMENTS OR OTHER AMENITIES OF THIS SUB-
        DIVISION."

  (4) A statement of record and a property report shall be filed with  the
director by personal delivery at, or certified mail to,  the  address  set
forth in R 338.3208.
  (5) The registration fee shall  accompany  a  statement  of  record  and
property report and shall be paid by check or money order payable  to  the
"State of Michigan."

  History:  1979 AC.


R  338.3232   Statements and reports; effective dates.
  Rule 32. (1) The property report shall  be  considered  a  part  of  the
statement of record for the purpose of determining the effective date  and
suspension of the effective date.
  (2) The effective date of the statement of record shall be no later than
60 days after the date of notice of filing which shall  be  issued  to  an
applicant within 10 days of receipt of the application by  the  department
unless:
  (a) The applicant has consented in writing to a delay.
  (b) The department has entered an order  of  rejection  with  notice  of
specific deficiencies therein.
  (c) If any amendment to the statement of record is filed before the time
of the registration, the statement of record shall be considered  to  have
been filed when the amendment was filed, unless  the  amendment  is  filed
with the consent of or pursuant to order of the department. In such  case,
the amendment shall be considered as filed as of the  original  notice  of
filing date.

  History:  1979 AC.


R  338.3233   Statements; rejection.
  Rule 33. (1) A notice of deficiency and order of rejection with  respect
to a statement of record or an amendment may be  issued  by  the  director
within 45 days after the date of notice of filing, if before its effective
date the director has reasonable grounds to believe that the statement  of
record or amendment is on its face incomplete or inaccurate.
  (2) An order of rejection with respect to a statement of record  may  be
issued to an applicant if it appears to the director  that  the  developer
has attempted or made  intentional  misrepresentations,  or  concealed  or
omitted material facts in the statement, or has attempted to evade or  has
evaded the provisions of the act, or  has  made  misleading  or  deceptive
statements. A developer may correct the particulars specified in an  order
of rejection within 15 days after receipt of the  order  unless  otherwise
extended by the department.

  History:  1979 AC.


R  338.3234   Statements   and   reports;   amendment,   suspension,   and
  consolidation.
  Rule 34. (1) An amendment to an effective statement of record  shall  be
filed within 30 days after a change which affects a material fact. If  the
department considers it necessary or appropriate in the public interest or
for the protection of  purchasers,  it  may  suspend  the  certificate  of
registration until the amendment is considered registered and an intent to
reject is entered or a delay agreed upon.
  (2) If a developer registers additional subdivided lands to  be  offered
for sale, he may consolidate the subsequent registration with any  earlier
registration offering subdivided lands for sale under the same promotional
plan and the property report shall be amended to  include  the  additional
lands so registered.  The  consolidation  of  registration  of  additional
subdivided lands shall be considered registered after 30  days  unless  an
intent to reject is entered with  a  specific  statement  of  deficiencies
within 30 days thereof or a delay is agreed upon.
  (3) If, in connection with lots previously offered for sale and  covered
by an effective statement  of  record,  the  developer  intends  to  offer
additional lots as part of a common promotional plan, either a  new  or  a
consolidated  statement  shall  be  filed.  The  developer  shall   answer
specifically each question in the statement  and  submit  a  new  property
report. The developer  shall  not  incorporate  by  reference  answers  to
questions  in  the  previous  filing.  Supporting  documentation  may   be
incorporated by reference where it applies to both the original filing and
to the  additional  lots  to  be  offered.  In  all  other  respects,  the
consolidated statement shall conform to the  requirements  of  an  initial
statement filed in accordance with these rules.

  History:  1979 AC.


R  338.3235   Registration under other law.
  Rule 35. (1) A registration of a subdivision in effect under  any  other
act of this state shall remain in  full  force  and  effect,  except  that
within 30 days after the effective compliance date of the act  in  section
35, the developer shall comply with the  additional  requirements  of  the
act.
  (2) If a statement of record has been filed with  and  accepted  by  the
office of interstate land sales registration, United States department  of
housing and urban development, the department may accept a copy of same as
part of the disclosure requirements under  the  act  if  the  material  is
accompanied by a statement under oath by the  developer,  certifying  that
the copies are copies of all documents upon which the federal statement of
record was based and stating the effective date of the federal filing.  An
addendum form prescribed by the department shall  be  fully  executed  and
submitted to the department in addition to the certified federal statement
of record.

  History:  1979 AC.


R  338.3236   Investigations and certificates of registration.
  Rule 36. (1) After receipt of a properly executed statement  of  record,
the department shall  examine  and  investigate  the  matters  therein  in
accordance with sections 13 and 20 of the act.
  (2)  After  inquiry  and  examination,  the  department  shall  issue  a
certificate of registration if the requirements of the act and these rules
are met. The department shall  also  approve  the  form  of  the  property
report.

  History:  1979 AC.


R  338.3238   Annual reports.
  Rule 38. A developer shall file an annual report in the form  prescribed
by the department within 30 days after each annual anniversary date of  an
order registering subdivided  lands.  The  report,  as  a  minimum,  shall
reflect any material changes in  information  contained  in  the  original
statement  of  record  and  property  report.  An  annual  report   of   a
consolidated registration is permitted within 30  days  after  the  annual
anniversary date of the consolidated  registration.  Payment  of  the  fee
required by R 338.3206 shall accompany the annual report.

  History:  1979 AC.


R  338.3239   Termination of registration.
  Rule 39. (1) The registration of a  project  in  good  standing  may  be
terminated if all of the following requirements have been met:
  (a) All lots, parcels, units, or interests have been  sold  or,  in  the
case of an out-of-state project, no  further  sales  are  to  be  made  to
Michigan residents.
  (b) All purchasers have received deeds or the deeds have been placed  in
trust with a bank, savings and loan, or title  insurance  company  pending
completion of the purchaser's contract.
  (c) All promised improvements and amenities are complete.
  (2) An application for termination shall be  made  in  the  form  of  an
affidavit. The affidavit shall verify compliance with this rule.
  (3) An inspection of the property by the administrator may  be  required
for approval of the application for termination.

  History:  1990 AACS.

                     PART 4. PROTECTION OF PURCHASERS

R  338.3241   Unfair acts and practices; documents.
  Rule 41. It is unfair for a person to use a contract,  agreement,  deed,
option or other evidence of disposition  of  lands  under  the  act  which
contains provisions whereby a purchaser or prospective  purchaser  agrees,
without  his  written  consent  thereto  in  a  separate  document  or  by
conspicuous type in any such instrument:
  (a) To waive a right afforded by the act; the interstate land sales full
disclosure act (82 Stat. 590; 15 U.S.C. S1701 et seq.)  and  the  consumer
credit protection act, commonly known as the federal truth in lending act,
and any rules or regulations promulgated thereunder.
  (b) To assume all risk of loss to the property without title passing  to
the purchaser or actual possession being in the purchaser.
  (c) To a prior or subsequent sale of the optioned or purchased property.
  (d) To waive as against an assignee of the  developer,  a  mortgagee  or
subsequent holder, a claim or defense arising out of the transaction  that
the purchaser would have against the developer.
  (e) To forfeit all prior payments upon default.
  (f) To acceleration of the unpaid balance of a contract upon default.
  (g) To lose possession of the property without notice  of  and  a  prior
hearing in a court of competent jurisdiction.
  (h) To waive a right to redeem the property after default.
  (i) That an assignee, mortgagee or subsequent holder of the developer is
not obligated to perform as to the purchaser.
  (2) It is unfair for a developer, his  agents,  servants,  employees  or
others acting on his behalf:
  (a) To offer to or induce a purchaser to execute a  document,  paper  or
writing without all  spaces  filled  in  or  inapplicable  spaces  clearly
stricken.
  (b) To alter or deface a document, paper or writing without the knowing,
intelligent and voluntary consent of the parties thereto.

  History:  1979 AC.


R  338.3242   Unfair acts and practices; discrimination.
  Rule 42. It is unfair for a developer, his agents,  servants,  employees
or others acting on his behalf to  discriminate  on  the  basis  of  race,
color, religion, sex or  national  origin  in  an  offer  to  sell,  sale,
financing or other disposition of land including making available the  use
of all improvements  or  other  amenities  of  the  existing  or  proposed
subdivision.

  History:  1979 AC.


R  338.3243   Unfair acts and practices; general.
  Rule 43. (1) It is unfair for a person to use  a  method  of  rebate  of
interest or finance charge which requires or results in a purchaser paying
a greater amount of interest or finance charge  upon  prepayment  than  he
would have paid if he had financed for that shorter period up to the  time
of prepayment.
  Example: Use of "rule of 78's" of "sum of the digits" method.
  (2) It is unfair for a developer, his  agents,  servants,  employees  or
others acting on his behalf:
  (a) To make a promise with no present intent to perform it.
  (b) To fail to reveal to the  purchaser  or  prospective  purchaser  all
terms, conditions, notices and amounts of any contract, agreement, option,
deed, property report or other evidence of the  purchaser's  indebtedness.
  (c) To substitute another lot, unit, parcel or interest in land for that
purchased or optioned  without  the  knowing,  intelligent  and  voluntary
consent thereto by the purchaser.
  (3) It is unfair for a developer to fail to afford to  a  purchaser  all
rights, privileges or advantages  that  are  represented  or  implied  are
available to a purchaser as the result of the purchase.

  History:  1979 AC.


R  338.3251   Deceptive acts and practices.
  Rule 51. The methods, acts, and practices listed  in  R  338.3252  to  R
338.3259 are deceptive and a developer, his agents, servants, employees or
others acting on his behalf shall not engage in them.

  History:  1979 AC.


R  338.3252   Deception; approvals and memberships.
  Rule 52. (1) Representing that  the  developer,  his  agents,  servants,
employees, or others acting on his behalf, have sponsorship,  approval  or
certification they do not have.
  (2) Representing that land has  been  inspected  by  the  department  or
received approval or both whether in fact it has or has not.
  (3) Representing the necessity,  desirability  or  the  advantage  to  a
prospective purchaser of dealing with a developer, by a  false  connection
with or endorsement by the government, a nationally known organization  or
membership in a professional association.

  History:  1979 AC.


R  338.3253   Deception; availability of land and utilities.
  Rule 53. (1) Representing the availability of land without  clearly  and
conspicuously disclosing in immediate conjunction therewith any limitation
on availability, location or quantity.
  (2) Using the developer's personnel to repeatedly announce that lots are
being sold when in fact this is not the case or to make  false  repetitive
announcements of the same lot being sold.
  (3) Representing a  utility  service  as  "available"  or  some  similar
representation,  unless  such  utility  service  is   installed   in   the
subdivision  and  ready  for  use  or  use  is  assured  under   financial
arrangements made for installation and such arrangements are disclosed.

  History:  1979 AC.


R  338.3254   Deception; access to subdivisions.
  Rule 54. (1) Representing or implying that a subdivision  is  restricted
to owners, purchasers or their families by  means  of  guards  or  private
roads or facilities, the  use  and  enjoyment  of  which  require  special
identification, unless this is true.
  (2) Representing that a prospective purchaser has to pay a refundable or
nonrefundable temporary membership fee in order to visit, tour or  inspect
a subdivision for the reasons that such is restricted to members only when
in fact such offer is made systematically and on a regular  basis  to  all
persons solicited for purchase.

  History:  1979 AC.


R  338.3255   Deception; visits and free goods and services.
  Rule 55. (1) Failing to reveal in an offer to induce a person to  visit,
inspect, or tour a subdivision all  terms,  conditions,  or  prerequisites
that have to be met by any person.
  (2) Offering or representing that goods or services are  "free"  without
clearly or conspicuously disclosing  in  immediate  conjunction  with  the
offer or representation all terms, conditions,  or  prerequisites  to  the
receipt, retention, or use of the goods or services.

  History:  1979 AC.


R  338.3256   Deception; price, value, and credit.
  Rule 56. (1) Representing or implying that a prospective  purchaser  has
to act quickly to purchase land at a savings since the  price  thereof  is
about to increase unless in fact a decision has been made to increase  the
price and that the increase does take effect.
  (2) Representing that the price of land to a prospective purchaser is  a
discount or reduction from a regular price unless in fact the  represented
regular price was  the  customary  and  regularly  sold  at  price  for  a
reasonable prior period of time.
  (3) Representing or suggesting that the price of land is a savings  when
compared to other prices sold at by competitors of  the  developer  unless
such other land with  the  higher  price  has  the  same  characteristics,
attributes and qualities of  the  offered  or  advertised  land  and  such
compared to prices are not fictitious. Example: "Lake front lots this week
$5,000. Compare at $8,000."
  (4) Failing to reveal the cost of the land to the developer where it  is
represented the purchaser is making an investment, which will increase  in
value due to the sole efforts of the developer.
  (5) Representing that a purchaser is making an investment in real estate
which will increase in value as the result of the effort of the  developer
unless this is true.
  (6) Offering or representing that credit availability is  easy  when  in
fact it is not.
  (7) Offering or representing that credit terms are  easy  when  in  fact
they are not.
  (8) Misrepresenting or causing others to misrepresent the interest  rate
or finance charge as other than it actually is.

  History:  1979 AC.


R  338.3257   Deception;   repurchases;   refunds;    consideration    for
  referrals.
  Rule 57. (1) Representing to a purchaser or prospective  purchaser  that
the developer will  buy  back,  resell,  list,  or  otherwise  dispose  of
purchased property unless this is true.
  (2) Representing or inducing a purchaser or prospective purchaser to buy
land or execute a contract, agreement,  option  for  a  consideration,  or
other evidence of indebtedness on the basis that if the purchaser  is  not
satisfied a refund will be made, unless this is true.
  (3) Representing or promising a  commission,  bonus,  discount,  reward,
override, or prize for referring other purchasers to the developer,  where
such promise or representation is similarly made to those referred.

  History:  1979 AC.


R  338.3258   Deception; promotion schemes; documents.
  Rule 58. (1) Representing that a developer,  salesman,  agent,  servant,
employee or other acting on behalf of a developer is conducting a  survey,
contest, poll or other similar inquiry, when in fact it  is  a  systematic
marketing approach in an effort to sell property.
  (2) Representing  to  a  prospective  purchaser  that  he  is  specially
selected when in fact he is not.
  (3)  Obtaining  a  prospective  purchaser's  signature  to  a  contract,
agreement, option or other evidence of indebtedness by representing it  is
only a reservation, receipt or temporary membership certificate.
  (4) Failing to clearly and  conspicuously  inform  a  purchaser  that  a
contract, promissory note or  other  evidence  of  indebtedness  could  be
assigned.

  History:  1979 AC.


R  338.3259   Deception; miscellaneous.
  Rule 59. (1) Misrepresenting the necessity, desirability or advantage to
a prospective purchaser of dealing with a developer by  misrepresenting  a
developer's alleged advantages of size.
  (2) Offering or representing to sell or lease lots,  units,  parcels  or
interests in land which in truth the developer does not intend or want  to
sell or lease.
  (3) Knowingly making a statement or illustration which creates  a  false
impression of the kind, quality, nature and value of the land offered when
later, the purchaser may be routinely switched from the advertised land to
other land.
  (4) Failing to disclose clearly  and  conspicuously  the  use  to  which
contiguous land has been put where the disclosure is material to  the  use
of the lot or subdivision in light of the positive  representations  made.
  (5) Engaging in any other method, act or practice which has the capacity
or tendency to deceive.

  History:  1979 AC.

                 PART 5. ADVERTISING AND SALES PROMOTIONS

R  338.3261   Effect of standards.
  Rule 61. Precise rules to determine that material is misleading, or that
a plan of sale or development lacks adequate safeguards and assurances  to
prospective purchasers, cannot be made which will  be  applicable  in  all
situations. Without an intent to limit its consideration or  determination
to the general standards set forth in these rules and without  an  attempt
to compel  any  particular  form  or  method  of  advertising,  promotion,
development or sale of subdivided lands, the standards in R 338.3262 to  R
338.3270 are guides for a person preparing to  file  advertising  material
and for department personnel. These standards are not considered to be all
inclusive for  the  department  in  evaluating  advertising  to  determine
whether it is false, deceptive or misleading and fails to  make  full  and
fair disclosure within the intent of the act and these rules.

  History:  1979 AC.


R  338.3262   General standards.
  Rule 62. (1) Claims and representations contained in  advertising  shall
be accurate and provable.
  (2) Advertising  shall  not  misrepresent  facts  or  create  misleading
impressions.
  (3) Advertising shall  not  contain  a  statement  which,  though  true,
implies an untruth.
  (4) Advertising shall not make  a  derogatory  or  unfair  reference  to
competitive developments, subdivisions, or properties.
  (5) Advertising shall not reprint published material unless  information
contained in  the  reprint  is  representative,  truthful,  relevant,  and
pertinent to the property being offered.
  (6) Advertising shall not contain  a  statement,  photograph  or  sketch
portraying the use to which land can be put unless the land can be put  to
such use without unreasonable cost.
  (7) Advertising shall not contain an asterisk  or  any  other  reference
symbol as a means of contradicting or substantially changing a  previously
made statement or as a means of obscuring a material fact.
  (8) Advertising shall not use a name or trade style which  implies  that
the advertiser is a nonprofit research organization or  public  bureau  or
group, when such is not true.  Advertising  of  such  an  organization  is
prohibited when the true nature of  the  plan  of  sale  or  ownership  is
misrepresented or concealed.
  (9) Maps, plats, or representations shall clearly indicate the estimated
date that development will be completed. If completion dates  are  over  a
period of years, then a series of shadings, outlines or coding may be used
to indicate estimated dates of completion.

  History:  1979 AC.


R  338.3263   Distances.
  Rule 63. (1) Where a community is referred to, advertising  shall  state
the location of the subdivision  and  the  mileage  from  the  approximate
geographical center of the subdivision in road miles  to  the  approximate
downtown or geographical center of the community.
  (2) Where an amenity or improvement is referred  to,  advertising  shall
disclose with reasonable specificity, the  location  of  such  amenity  or
improvement in relation to the size and location of the subdivision.
  (3) Advertising shall not use  such  terms  as  "minutes  away,"  "short
distance," "only miles," "near" and terms of similar  import  to  indicate
distance, unless the actual distance in road miles is used in  conjunction
with the terms.

  History:  1979 AC.


R  338.3264   Sketches and pictures.
  Rule 64. (1) Advertising shall not contain an artist's sketch to portray
a proposed improvement or nonexistent scene without an indication that the
portrayal is an artist's sketch and that the improvement  is  proposed  or
the  scene  does  not  exist.  An  artist's  conception  of  an   existing
improvement or scene shall be representative and state that the  rendering
is an artist's conception.
  (2)  Advertising  shall  not  contain  before  and  after  pictures  for
comparative purposes without the analysis of the pictures.

  History:  1979 AC.


R  338.3265   Improvements and facilities.
  Rule 65. (1) Advertising of an  improvement  to  a  subdivision  or  any
specific part thereof which is not completed shall not be made  unless  it
is stated in unmistakable terms that the improvement is merely proposed or
under construction and the  estimated  date  of  the  promised  completion
indicated.
  (2) Advertising shall not describe land as a homesite or lot if  potable
water is not available. Advertising shall give reasonable assurance that a
septic tank will operate or a sewer system is in existence unless facts to
the contrary  are  included  in  each  advertisement  pertaining  to  that
property.
  (3) Advertising shall not contain  a  statement,  photograph  or  sketch
relating to a facility for recreation, sports  or  other  convenience  not
presently in existence, unless it is stated that the facility  is  not  on
the land and the distance thereto in miles is given, or that the  facility
is merely proposed.
  (4) Advertising shall not refer to  a  governmental  facility,  wherever
located, unless money has been budgeted for  actual  construction  of  the
facility  and  is  available  to   the   public   authority   having   the
responsibility of construction, or an actual disclosure  of  the  existing
facts concerning a governmental facility is made.
  (5) Advertising shall not refer to a governmental facility under  study,
unless it is fully disclosed that the  facility  is  merely  proposed  and
under study and no reference is made to  the  location  or  route  of  the
facility until such has been decided by the responsible public  authority.

  History:  1979 AC.


R  338.3266   Roads, streets, waterways, and floods.
  Rule 66. (1) Advertising which refers to  "roads"  and  "streets"  shall
make affirmative disclosure as to the nature of  the  roads  and  streets,
such as paved, gravel or dirt. To be described as  improved  or  paved,  a
road and a street shall be constructed and surfaced according  to  county,
city  or  other  acceptable  authority  specifications   or   satisfactory
guarantees made for such construction and surfacing.
  (2) Advertising shall not refer to property  as  waterfront  unless  the
property being offered actually fronts on a canal or other body of  water.
  (3)  Advertising  which  uses  the  term  "canal"  shall  disclose   the
approximate width and approximate depth of water in the canal and  whether
or not it provides access to open water.
  (4) Advertising shall disclose  if  the  land  or  any  part  of  it  is
regularly flooded or substantially covered by standing water for  extended
periods of time during the year, unless adequate drainage  is  assured  by
bonding or other means acceptable to the department.

  History:  1979 AC.


R  338.3267   Access and easements.
  Rule 67. (1) Advertising of land which does  not  have  available  legal
access to the purchaser shall disclose that fact and its effect.
  (2) Advertising which refers to legal access  shall  be  accompanied  by
phraseology to indicate whether the access is  usable  as  a  passage  for
conventional automobiles.
  (3) Advertising shall not refer to the existence of a road easement or a
road right-of-way unless the easement or right-of-way has  been  dedicated
to the public or to appropriate property owners and recorded in the public
records of the county where the property is located.
  (4) Advertising which indicates the size  of  the  tract  offered  shall
indicate the size and kind of all easements to which the property  may  be
subject. If the property is subject to  easements  which  are  unusual  in
size, this fact shall also  be  noted.  Maps,  plats,  representations  or
drawings shall indicate the dimensions of the tract and all easements.

  History:  1979 AC.


R  338.3268   Consideration; prices and values.
  Rule 68. (1) Land shall not be advertised as "free" if  the  prospective
purchaser is required to give any consideration therefor. Land  shall  not
be advertised for "closing costs only" when these costs are  substantially
more than normal or when additional land has to be purchased at  a  higher
price or to render the land usable.
  (2) Advertising which refers to  a  property  exchange  privilege  shall
state clearly any qualification concerning the exchange privilege.
  (3) Advertising shall not refer to a pre-development  sale  at  a  lower
price because the land has not yet been developed unless there is  a  plan
of development and a subdivision plat has  been  recorded,  or  reasonable
assurance is available that the plan will be completed.
  (4) Advertising shall not indicate a discount on property  that  appears
to effect a price reduction from the advertised price. A discount  may  be
given for quantity purchases, cash, larger payments or for any  reasonable
basis. The purpose of this standard is to eliminate the use of  fictitious
pricing and illusory discounts.
  (5) Advertising shall not contain  false  statements  concerning  future
price increases by the subdivider.
  (6) Advertising shall not make  predictions  of  specific  or  immediate
price or value increases of lots, parcels, or units  of  advertised  lands
when the subdivider does not have control over such price increases.
  (7) Advertising shall not compare land values unless it is clear who  is
making the comparison and it is relevant and fair.

  History:  1979 AC.


R  338.3269   Taxes and assessments.
  Rule 69. (1) Advertising containing statements regarding taxes  and  the
amounts thereof shall employ the latest available figures.
  (2) Advertising referring to the  purchase  price  of  land  shall  also
include any additional compulsory assessment or cost  to  the  prospective
purchaser that are known, or should have reasonably  been  known,  at  the
time of disposition.
  (3)  Advertising  referring  to  a  promised  improvement  for  which  a
prospective purchaser will be assessed shall disclose that fact.

  History:  1979 AC.


R  338.3270   Miscellaneous standards.
  Rule 70. (1) Advertising shall not represent that the land  offered  for
sale may be subdivided or resubdivided unless it  includes  necessary  and
relevant information regarding the estimated cost of  future  subdividing.
  (2) Advertising shall not infer or imply that the subdivider will resell
or repurchase the land being  offered  at  some  future  time  unless  the
subdivider has agreed with the department to resell or repurchase land for
or on behalf of purchasers and has  given  reasonable  assurances  to  the
department to demonstrate his ability to perform this agreement.
  (3) Advertising which refers  to  oil,  gas,  or  mineral  rights  shall
disclose all pertinent facts pertaining to such rights.
  (4)  Advertising  which  refers  to   gifts,   benefits,   or   vacation
certificates shall disclose the terms and conditions of offers therein  in
conspicuous print.
  (5) Advertising may contain the unqualified term "development"  only  to
describe a subdivision, the plat of which has been recorded.
  (6) Advertising shall not contain the  terms  "guarantee  or  guaranteed
refund" unless the refund is unconditional.
  (7) A newsletter giving information as to a  place,  facility  or  event
more than 10 miles distant  from  land  involved,  or  make  a  prediction
applicable to an area greater than the land  involved,  as  for  instance,
future population of an entire state, shall carry a disclaimer as follows:
  "Information contained in this newsletter is general to (name of state).
Property for sale by (development company) may  not  be  affected  at  any
foreseeable time by any place, facility, event or predication  described."
  (8) Advertising which forecasts a future event or population trend shall
be by a qualified person and pertinent to the offering.

  History:  1979 AC.


R  338.3281   Visitation programs; general disclosures.
  Rule 81.  (1)  The  terms,  conditions  and  prerequisites  to  use  and
enjoyment of a  visitation  program  shall  be  disclosed  in  promotional
material, advertising, and on any certificate. This includes, but  is  not
limited to, the developer's participation in the program,  the  nature  of
any gift or other  benefit,  including,  but  not  limited  to,  what  the
prospect will actually receive, when he will receive it, the obligation he
is under, if any, and the fact, if true, that the participant  is  to  pay
his own transportation, food, lodging or other  incidental  expenses,  and
all other conditions or limitations placed on the gift or benefit.
  (2) Material for  a  visitation  program,  whether  written,  television
script, or radio presentation, shall disclose,  in  immediate  conjunction
with the offer of a visit to land, the expenses of which will be  paid  in
whole or in part by others, that a  person  enjoying  the  visit  will  be
subjected to a sales promotion for land unless, if such is not true, there
is a disclosure that a person is not obligated nor required as a  term  or
condition of the use and enjoyment of the visit, to participate in, listen
to or otherwise be subjected to a sales promotion for land and such is  in
fact honored.

  History:  1979 AC.


R  338.3282   Visitation programs; specific disclosures.
  Rule 82. (1) In the promotion of a visitation plan, the developer or his
representative shall clearly identify themselves.
  (2) The names of certificate  companies  with  whom  the  developer  has
contracted, if any, shall be disclosed.
  (3) Promotional material including advertising  and  certificates  shall
disclose the identity of hotels, motels, places of lodging, transportation
companies, restaurants, attractions, or other similar establishments which
honor, subscribe to, or participate in the visitation plan.
  (4) A certificate or other written material evidencing the rights  of  a
donee, beneficiary, or certificate holder shall contain a fixed expiration
date for the rights.

  History:  1979 AC.


R  338.3283   Visitation programs; guarantees.
  Rule 83. (1) Promotional material for a  visitation  program,  including
advertising and certificates, shall disclose  the  guarantees  made  by  a
developer to insure a participant's use and enjoyment of a visit.
  (2) A program which uses as a part thereof the granting or giving  of  a
discount coupon or  other  similar  discount  program  shall  disclose  in
immediate conjunction therewith the guarantees  that  have  been  made  to
insure the participant's use and enjoyment thereof.

  History:  1979 AC.



R  338.3284   Visitation programs; procedures.
  Rule 84. (1) A visitation program shall be  described  as  part  of  the
statement of record or described separately as advertising material.
  (2) A certificate to be used in a visitation program shall be  submitted
to the department and shall meet the advertising standards as set forth in
this part.
  (3) The department shall be advised  of  a  material  change,  including
identity  of  the  certificate  companies,  hotels  or  facilities  before
institution of the material change.
  (4) When a participant in a visitation program is obligated to listen or
be subjected to a land sales promotion, the developer shall supply a  copy
of the property report and forms of agreement as provided in the act.

  History:  1979 AC.


R  338.3291   Promotional plans; general provisions.
  Rule  91.  The  department  will  not  enter  an  order  registering   a
subdivision and will consider  the  general  promotional  plan  false  and
misleading,  and  the  plan  of  sale  or  development  lacking   adequate
safeguards and assurances, if:
  (a) The fee title holder is not bound by part 6.
  (b) The plat or plan of the subdivision by which lots, tracts or parcels
are offered for sale has not been duly recorded in the plat records of the
county where the lands are located if required by  law  and  the  streets,
roads, alleys, easements, parks and other public areas shown thereon  have
not been dedicated to the appropriate private or public  authority.  Sales
maps which are not so recorded may be used if they  are  not  designed  to
deceive or would not tend to  deceive  prospective  purchasers,  state  in
conspicuous print that they are maps  only  and  not  plats,  and  include
additional  disclaimers  in  conspicuous  print  to   prevent   misleading
purchasers.
  (c) The contract or agreement given to a prospective  purchaser  by  the
developer upon payment of the first money by the prospective purchaser  is
not sufficient in form to immediately vest an interest in the land in  him
and to afford notice  to  all  persons  of  his  interest  by  recordation
thereof.
  (d) The developer does not provide adequate safeguards, approved by  the
department, reasonably assuring  contract  purchasers  who  have  complete
refund privileges for more than 30 days, that if the refund privileges are
exercised the developer will be in a position to refund in accordance with
his agreement.

  History:  1979 AC.


R  338.3292   Promotional plans; encumbrances on land and contracts.
  Rule  92.  The  department  will  not  enter  an  order  registering   a
subdivision and will consider  the  general  promotional  plan  false  and
misleading and the plan of sale or development lacking adequate safeguards
and assurances, if:
  (a) Title to the subdivision is so  encumbered  that  the  lands  to  be
offered cannot be used for any purpose expressly or impliedly  represented
in  the  plan  of  sale  and  advertising  without  the  removal  of   the
encumbrance, unless adequate  safeguards  are  established  reasonably  to
assure the encumbrance will be removed  before  the  time  the  subdivider
promises to deliver the interest contracted for.
  (b) The developer allows a mortgage, lien or encumbrance  to  be  placed
and remain on the subdivision, or a part thereof, other than specific lots
upon which improvements are constructed, and other than those in existence
at the time of registration of  the  subdivision,  without  notifying  the
department and furnishing adequate  safeguards  reasonably  assuring  each
purchaser that upon payment of the purchase price provided  in  the  sales
agreement, title to the property  will  be  delivered  with  all  promised
improvements as contracted. The safeguards shall be subject to review  and
approval by the department at its discretion.
  (c) The owner transfers, assigns, sells, pledges, or gives as collateral
security, sales contracts on a subdivision without notice  and  submission
to the department of evidence of adequate safeguards to reasonably  assure
that each contract purchaser, upon payment of the purchase price  provided
in the sales agreement, will receive the title to the  lands  as  promised
and improvements, if any. The safeguards shall be subject  to  review  and
approval by the department at its discretion.

  History:  1979 AC.


R  338.3295   Promotional plans; group meetings.
  Rule 95. (1) If an advertising or promotional plan includes  promotional
group meetings, the standards in this rule shall be used as a guide by the
director in determining whether or not the nature and manner of conducting
the  meetings  are  such  as  to  disclose  fully  all  significant  facts
concerning the subdivision.
  (2) The department shall be notified in writing of the meeting not  less
than 15 days before its date. Notice shall consist of the date, hour,  and
place of the meeting and the names of the developer and real estate broker
involved.
  (3) The meeting shall  be  conducted  in  a  place  open  to  department
personnel for inspection and monitoring.
  (4) Department personnel as authorized by the director shall  have  free
access to the meeting and sales presentations.
  (5) The advertising in the  meeting  is  subject  to  the  standards  of
advertising contained in these rules.
  (6) A false or dummy buyer shall not be used to initiate sales or buying
climate or for any other purpose, nor shall it  be  indicated  that  lots,
parcels, units or interests have been sold, when in fact,  they  have  not
been sold.
  (7) An oral statement to a prospective purchaser at the meeting shall be
completely consistent with written material approved by the department.
  (8) A prospective purchaser who expresses a desire or  intent  to  leave
the meeting at any time during or after the meeting may not in any  manner
be impeded from departing, pressured  to  remain  or  denied  any  benefit
promised  in  exchange  for   attending   the   meeting,   including   any
transportation.

  History:  1979 AC.


R  338.3301   Inferences; effect.
  Rule 101. An inference  reasonably  to  be  drawn  from  advertising  or
promotional material will be considered to be a positive assertion  unless
the inference is negated therein  in  clear  and  unmistakable  terms,  or
unless adequate safeguards have been provided by the developer  reasonably
to guarantee existence of the thing inferred. Advertising and  promotional
material will be judged  on  the  basis  of  the  positive  representation
contained therein and the reasonable inferences  to  be  drawn  therefrom.
Unless the contrary affirmatively appears in  advertising  or  promotional
material, the inferences set forth in R 338.3302 to  R  338.3304  will  be
assumed to have been intended.

  History:  1979 AC.


R  338.3302   Inferences; homesites and building lots.
  Rule 102.  When  homesites  or  building  lots  are  advertised  without
qualification the inferences are that:
  (a) The lots are usable for such purpose without any further improvement
or development by the prospective purchaser.
  (b) There is an adequate potable water supply available.
  (c) The lands have been approved for installation  of  septic  tanks  or
that an adequate sewage disposal system is installed.
  (d) No further major draining, filling, or  sub-surface  improvement  is
necessary to construct dwellings, except for  reasonable  preparation  for
construction.
  (e)  The  individual  homesites  or  building  lots  are  accessible  by
automobile without additional expense to the purchaser  over  an  existing
right-of-way.
  (f) No other fact or circumstance exists to prohibit use of the lots  as
homesites or building lots.

  History:  1979 AC.


R  338.3303   Inferences; other lands.
  Rule 103. When lands are advertised without qualification as usable  for
a particular purpose other than homesites or building lots, the  inference
is that the land is immediately accessible and usable for such purpose  by
purchasers  without  the  necessity  for  draining,   filling   or   other
improvement before putting the lands to use for such purpose,  except  for
reasonable preparation for construction, and that no fact or  circumstance
exists to prohibit use of the lands for such purposes.

  History:  1979 AC.


R  338.3304   Inferences; miscellaneous.
  Rule 104. (1) When title insurance, abstract or  attorney's  opinion  is
advertised, the inference is that the  seller  can  and  will  convey  fee
simple title free and clear of all liens, encumbrances and defects  except
those which are disclosed in writing to the prospective  purchaser  before
purchase.
  (2)  When  a  recreational  facility,  improvement,  accommodation,   or
privilege is advertised, the inference is that it is on the  land  at  the
present time and available to the purchasers  of  lots  at  no  additional
expense, unless otherwise specified.
  (3) When an improvement is advertised,  the  inference  is  that  it  is
completed, unless it is advertised as proposed, and sufficient  guarantees
have been made for its completion.

  History:  1979 AC.


R  338.3307   Presumptions.
  Rule 107. It will be presumed by the director that:
  (a) Advertising filed for approval will be that used to offer  for  sale
or to induce persons to acquire an interest in  the  title  to  all  lands
which are described in or referred to in the material or  supporting  data
filed with the department until changes in advertising  for  this  purpose
are submitted to and approved by the department.
  (b) Advertising published, disseminated or broadcast by or in behalf  of
an owner or entity owning more than 1 subdivision is being used  to  offer
lands in all subdivisions registered by that owner  or  entity  unless  an
express limitation is made by that owner or entity to the department or by
the department.
  (c) Advertising published or disseminated by or on  behalf  of  a  sales
agent is being used to offer lands  in  all  subdivisions  for  which  the
person is a sales agent unless an express limitation is made to or by  the
department.

  History:  1979 AC.


R  338.3311   Letters of transmittal.
  Rule 111. Each submission of advertising to the  department,  either  as
part of a statement of record or as  a  subsequent  submission,  shall  be
accompanied by a letter  of  transmittal  which  gives  a  brief,  written
description of each advertisement to assure that all future correspondence
and  orders  concerning  it  will  clearly  identify  it.  The  letter  of
transmittal  shall  be  signed  by  the  developer   or   his   authorized
representative  and  shall  verify  that  the  statements  made  and   the
representations contained therein have been reviewed and the advertisement
is truthful and correct to the best  of  his  knowledge  and  belief  with
regard to the statements contained therein.

  History:  1979 AC.


R  338.3312   Identification of material.
  Rule 112. (1) Advertising submitted to the department, either  with  the
original statement of record or by subsequent filing, shall be assigned  a
number so the department or the applicant may refer by  the  number  to  a
specific piece  of  advertising.  Advertising  relating  to  more  than  1
subdivision owned by different persons but being  sold  through  a  common
sales  agent  shall  be  assigned  a  designated  number.  However,   this
designation does not permit filings relating to separate  subdivisions  or
parts of subdivisons without payment  of  the  appropriate  fee  for  each
parcel, tract or subdivision to which it relates.
  (2) The developer shall print on advertising material approved for  use,
the number assigned by the department to that specific piece of  material.

  History:  1979 AC.


R  338.3313   Material with statements of record.
  Rule 113. (1) Advertising material submitted with a statement of  record
shall be considered in accordance with part 3.
  (2) Advertising material not submitted with a statement of record  shall
be submitted to the department for approval before its use in this  state.
This advertising will be approved or rejected by the department within  15
days after its receipt. Where an order of rejection is not entered  within
that time, the advertising will be deemed approved  unless  the  applicant
has consented in writing to a delay. If an amendment  to  the  application
for approval of advertising is filed before the  time  when  the  land  is
registered, the application shall be considered filed when  the  amendment
was filed, unless an amendment is filed with the consent of the department
or pursuant to its order. In such case, the application shall  be  treated
as filed on the date of filing the original application.

  History:  1979 AC.


R  338.3314   Determinations and rejections.
  Rule 114. In reviewing any advertising submitted by  an  applicant,  the
department shall determine whether it makes a full and fair disclosure  or
is false and misleading within the intent and meaning of the act and these
rules, by examining the form, language and content of the advertising  and
supporting data and any other available information to  ascertain  whether
the express and implied representations therein are true and make  a  full
and fair disclosure. If it appears that the representations are  not  true
and do not make a full and fair disclosure as to all subdivided  lands  to
which the filing relates, the department will enter an order of  rejection
or take such other action as it considers necessary.

  History:  1979 AC.


R  338.3317   Out-of-state advertising.
  Rule 117. When advertising approved by the department is disapproved  in
another state or jurisdiction, the advertising may be changed to meet  the
requirements of that state or jurisdiction without prior approval  by  the
department if:
  (a) The department is notified immediately of the change.
  (b) A copy of the advertising as changed is filed  with  the  department
within 10 days.
  (c) A copy of  correspondence  from  the  other  state  or  jurisdiction
requiring the change is filed with the department within 10 days.
  (d) The changed advertising is used only in the  state  or  jurisdiction
where the change was required.

  History:  1979 AC.


         PART 6. MEANS TO ASSURE RECEIPT OF CONTRACTUAL INTERESTS

R  338.3321   Subordination of blanket encumbrance liens.
  Rule 121. A blanket encumbrance shall evidence subordination of its lien
to the rights of persons  purchasing  from  the  developer  and  that  the
developer is able to secure releases from  the  blanket  encumbrance  with
respect to the  property.  The  provisions  shall  be  acceptable  to  the
department. For purposes of  this  rule,  subordination  of  the  lien  is
satisfied by a release clause which by its terms unconditionally  provides
for the release of contiguous and noncontiguous separate lots,  units,  or
parcels being offered to purchasers, so that the purchaser or lessee of  a
lot, unit or parcel shall obtain legal title or other interest  contracted
for, free and clear of the blanket encumbrance upon compliance with  terms
and conditions of the purchase or lease from the developer.

  History:  1979 AC.


R  338.3324   Trust and escrow accounts.
  Rule 124. If  the  encumbering  instrument  does  not  contain  adequate
release  clauses,  the  lien,  mortgage  or  other  encumbrance  shall  be
considered objectionable unless adequate  reserves  are  maintained  in  a
trust or escrow account. In  determining  adequacy  of  the  account,  the
department  will  be  guided  by  the  facts  and  circumstances  of  each
individual case, but the account shall comply with the following:
  (a) Funds shall be kept and maintained in an account separate and  apart
from the owner's personal funds.
  (b) The account shall be established in a bank or  trust  company  doing
business in this state, or another state where the account is required  to
be maintained there by  the  laws  of  that  state  and  approved  by  the
department.
  (c) Monthly statements shall be furnished to the department  for  a  new
account for the first  6  months,  and  in  the  department's  discretion,
quarterly or semiannually thereafter.
  (d) The trust or escrow agreement shall state that  its  purpose  is  to
protect the purchaser or prospective purchaser in case  of  default  on  a
lien, mortgage or other encumbrance and shall authorize the department  to
inspect the records of the trustee relating thereto, and that  upon  order
of the department or a court, the trustee shall release and pay  over  the
funds to the department or a  purchaser  or  the  holder  of  the  blanket
encumbrance.
  (e) The department, by its director, shall execute an acknowledgment  on
the face of each agreement. This acknowledgment indicates approval of  the
form and content of the agreement, but shall not be construed to make  the
department a party thereto.

  History:  1979 AC.


R  338.3327   Instruments of sale.
  Rule 127. An instrument evidencing sale or disposition of an interest in
a subdivision shall be executed in a recordable form  in  accordance  with
the laws of the state where the land is  located.  An  applicant  has  the
burden of an affirmative showing of this compliance.

  History:  1979 AC.



            PART 7. MEANS TO ASSURE COMPLETION OF IMPROVEMENTS

R  338.3331   Improvements for public use, convenience, or necessity.
  Rule 131. A subdivision or a part thereof on  which  construction  of  a
promised improvement for public use, convenience or necessity has not been
completed,  shall  not  be  registered  for   disposition.   However,   an
incompleted improvement does not constitute an objection if completion  of
the improvement is assured by substantial completion, an irrevocable  bank
letter of credit, bond,  or  similar  undertaking  posted  with  a  public
authority and acceptable  to  the  department,  or  by  adequate  reserves
established and maintained in a trust or escrow  account.  In  determining
adequacy of the account, the department will be guided by  the  facts  and
circumstances of each individual case, but the account shall  comply  with
the following:
  (a) Funds shall be kept and maintained in an account separate and  apart
from the owner's personal funds.
  (b) The account shall be established in a bank or  trust  company  doing
business in this state, or another state where the account is required  to
be maintained there by  the  laws  of  that  state  and  approved  by  the
department.
  (c) Monthly statements shall be furnished to the department  for  a  new
account for the  first  6  months  and  in  the  department's  discretion,
quarterly or semiannually thereafter.
  (d) The trust or escrow agreement shall state that  its  purpose  is  to
protect the purchaser or prospective purchaser in case the owner fails  to
complete  constsruction  of  promised  improvements  or  to  satisfy   any
obligations or liens encumbering the purchaser's title by  reason  of  the
construction and shall authorize the department to inspect the records  of
the trustee relating thereto.
  (e) The department, by its director, shall execute an acknowledgment  on
the face of each agreement. This acknowledgment indicates approval of  the
form and content of the agreement, but shall not be construed to make  the
department a party thereto.

  History:  1979 AC.


R  338.3332   Improvements not for public convenience, use, or  necessity.
  Rule 132. A subdivision or a part thereof on  which  construction  of  a
promised improvement not for public use, convenience or necessity has  not
been completed shall not be registered  for  disposition  to  the  public.
However, the incompleted improvement shall not constitute an objection  if
completion is assured by:
  (a) An adequate  plan  of  development,  including  financial  resources
committed to carry out the plan as provided in R 338.3335, which  plan  is
subject to the department's continuing review and approval.
  (b) In case of failure of a developer to establish an adequate  plan  or
to adhere to  the  plan  once  established,  the  department  may  require
establishment of a trust or escrow account.

  History:  1979 AC.


R  338.3335   Financial security.
  Rule 135. (1) The department may accept surety bonds,  escrow  accounts,
irrevocable bank letters of credit or any other financial  security  which
it considers adequate in assuring  a  plan  of  development  has  adequate
safeguards and assurances.  In  determining  the  security  required,  the
department shall examine the status of improvements, the over-all cost  of
improvements, the terms of purchasers' contracts, the financial  condition
of the subdivider and such other  data  as  it  considers  necessary.  The
department shall consider whatever financial security has been posted with
other governmental authorities in making its determination.
  (2) A surety bond will not be approved by the department unless it is on
the form provided by the department.

  History:  1979 AC.

                       PART 8. TAXES AND ASSESSMENTS

R  338.3341   Developer's duties.
  Rule 141. (1) In a transaction for the sale of land  under  the  act  in
which taxes are to be paid by either party, a developer shall:
  (a) Certify that there are no taxes, other than current taxes, owing  on
the property involved at the date of filing the  statement  of  record,  a
consolidated statement of record, or an amendment to either.
  (b) Provide a form of escrow accounting satisfactory to  the  department
in accord with subrule (2) if part of the purchasers'  funds  paid  in  or
payable by the terms of the instrument disposing of the land is to be used
for payment of taxes.
  (2) In order that  a  purchaser  will  receive  the  interest  in  lands
contracted  for,  if  the  developer  apportions   real   property   taxes
prospectively and requires a purchaser to pay such taxes in a lump sum  or
on a periodic basis, the developer shall place in the escrow account  100%
of the payments with which to pay taxes when due.

  History:  1979 AC.


R  338.3345   Purchaser's responsibilities.
  Rule 145. (1) A purchaser is not responsible for  payment  of  taxes  or
assessments levied before the effective date of  his  agreement  with  the
developer or his agent, unless such taxes are prospective  in  nature,  if
so, they may be prorated  and  the  instruments  evidencing  the  sale  or
disposition of an interest in a subdivision shall so state.
  (2) A purchaser shall not be assessed a service or collection fee or  be
required to pay a consideration for the assessment or allocation of  taxes
on the land involved in the transaction, in excess of that  charged  by  a
unit of government.

  History:  1979 AC.

          PART 15. DECLARATORY RULINGS; INVESTIGATIONS; HEARINGS

R  338.3451   Declaratory rulings.
  Rule 251. (1) The department, on request of an  interested  person,  may
issue a declaratory ruling as to the applicability of the act  or  a  rule
herein to an actual statement of facts when he submits to  the  department
the following:
  (a) A clear and concise statement of the actual statement of facts.
  (b) If the interested person desires, a  brief  or  other  reference  to
legal  authorities  upon  which  he  relies  for  determination   of   the
applicability of the act or a rule to the statement of facts.
  (2) The department, if it determines it will issue a declaratory ruling,
shall furnish the person with a statement to that effect and set forth the
time in which the department will issue the ruling.
  (3) A ruling shall repeat the  actual  statement  of  facts,  the  legal
authority on which the department relies for its ruling, if any,  and  the
ruling it makes. A ruling once issued is binding on the department and the
department may not retroactively change the ruling, but  nothing  in  this
rule shall prohibit the department from prospectively changing  a  ruling.

  History:  1979 AC.


R  338.3455   Officers to administer oaths and affirmations.
  Rule 255. The following officers of the  department  are  designated  to
administer oaths and affirmations during any investigation  or  proceeding
under the act:
  (a) Director of the department.
  (b) Director, land sales division.
  (c) Assistant director, land sales division.
  (d) Chief investigator, land sales division.
  (e) Presiding officer of a hearing.

  History:  1979 AC.


R  338.3456   Officers to issue subpoenas and institute discovery.
  Rule 256. (1) The following officers of the department are designated to
subpoena witnesses, issue subpoenas duces tecum  and  institute  discovery
proceedings, in accordance  with  Michigan  general  court  rules  in  any
investigation or proceeding under the act:
  (a) Director of the department.
  (b) Director, land sales division.
  (c) Assistant director, land sales division.
  (2) Nothing in this rule shall be construed to abrogate the authority of
a presiding officer prescribed in the  administrative  procedures  act  of
1969, as amended.

  History:  1979 AC.


R  338.3461   Rejection  of  application  for  advertising   approval   or
  statement of record; notice.
  Rule 261. (1) The department may reject a statement of record, including
a property report and advertising, for  a  subdivision  if  the  developer
fails  to  comply  with  the  act  or  these  rules  or  the  department's
requirements thereunder.  Before  entering  an  order  of  rejection,  the
department shall notify the developer, by certified mail, of its  decision
in a notice of intent to reject for deficiencies. This notice  shall  toll
the running of the 60-day period if the developer  undertakes  to  correct
the deficiencies.
  (2) The final decision shall be by further order.
  (3) An order of rejection may be entered after  15  days  following  the
date of receipt of the notice of intent to reject,  unless  the  developer
corrects the deficiencies to the  department's  satisfaction  within  that
time or the department extends the time to correct to a day certain.

  History:  1979 AC; 1990 AACS.


R  338.3463   Hearings; notices and conduct.
  Rule 263. (1) Parties shall be notified of a hearing by  certified  mail
at their last known address, which shall be sent not  less  than  20  days
before the date of the hearing.
  (2) A hearing shall be open to the public  and  shall  be  conducted  in
accordance with the administrative  procedures  act  of  1969,  being  Act
No. 306 of the Public Acts of 1969, as amended, being SS24.201  to  24.315
of the Michigan Compiled Laws.
  (3) A hearing shall be conducted by a presiding  officer  who  shall  be
appointed by the director of the land sales division  of  the  department.
The decision of such director shall be the final decision.

  History:  1979 AC.


R  338.3464   Hearings; appearances; pleadings.
  Rule 264. (1) A party may appear at a hearing in person  or  by  a  duly
authorized representative or attorney.
  (2) If a party fails to appear  after  proper  service  of  notice,  the
director of the land sales division, if no  adjournment  is  granted,  may
proceed with the hearing and make his decision  in  the  absence  of  such
parties.
  (3) An adjournment or continuance may be granted by the director of  the
land sales division or the person he designates for good cause shown by  a
party to the hearing or  on  his  own  motion  or  after  stipulation  and
agreement between all parties, but a request for adjournment shall be made
in writing not less than 5 days before the date set for the hearing.
  (4) A party may file a written answer to charges or claims made  or  may
present an oral statement at the time of the hearing.  Copies  of  written
pleadings and briefs shall be served on the director  of  the  land  sales
division and all other parties not less than 5 days before  the  date  set
for the hearing.

  History:  1954 ACS 76, Eff. Aug. 14, 1973; 1979 AC.


R  338.3465   Hearings; evidence.
  Rule 265. (1) Testimony shall be under oath or affirmation.
  (2) A deposition shall be taken only on order of  the  director  of  the
land sales division upon a showing that it is impracticable or  impossible
to obtain necessary evidence otherwise. It shall be  taken  in  accordance
with provisions for taking depositions in civil cases, as set forth in the
Michigan general court rules or other applicable court rules.

  History:  1979 AC.


R  338.3466   Decisions, orders, and rehearings.
  Rule 266. (1) Within a reasonable time after completion  of  a  hearing,
the director of the land sales division shall send by  certified  mail  to
the last known address of the parties the decision and orders which  shall
include findings of fact and conclusions of law.
  (2) A rehearing may be granted  by  the  director  upon  application  in
writing by a party to the hearing or upon his  own  motion  in  accordance
with the administrative procedures act of 1969, as  amended.  A  rehearing
shall be noticed and conducted in the same manner as an original  hearing.

  History:  1979 AC.