---
kind: "section"
citation: "15 U.S.C. § 1702"
title: "15"
title_heading: "Commerce and Trade"
number: "1702"
heading: "Exemptions"
release: "119-102"
date: "2026-07-12"
url: "https://uscodex.org/usc/15/1702"
units:
  - "Chapter 42 — Interstate Land Sales"
---

# §1702. Exemptions

- (a) **Sale or lease of lots generally—** Unless the method of disposition is adopted for the purpose of evasion of this chapter, the provisions of this chapter shall not apply to—
  - (1) the sale or lease of lots in a [subdivision](/usc/15/1701.md?p=3) containing less than twenty-five lots;
  - (2) the sale or lease of any improved land on which there is a residential, commercial, condominium, or industrial building, or the sale or lease of land under a contract obligating the seller or lessor to erect such a building thereon within a period of two years;
  - (3) the sale of evidence of indebtedness secured by a mortgage or deed of trust on real estate;
  - (4) the sale of securities issued by a real estate investment trust;
  - (5) the sale or lease of real estate by any government or government agency;
  - (6) the sale or lease of cemetery lots;
  - (7) the sale or lease of lots to any [person](/usc/15/1701.md?p=2) who acquires such lots for the purpose of engaging in the business of constructing residential, commercial, or industrial buildings or for the purpose of resale or lease of such lots to [persons](/usc/15/1701.md?p=2) engaged in such business; or
  - (8) the sale or lease of real estate which is zoned by the appropriate governmental authority for industrial or commercial development or which is restricted to such use by a declaration of covenants, conditions, and restrictions which has been recorded in the official records of the city or county in which such real estate is located, when—
    - (A) local authorities have approved access from such real estate to a public street or highway;
    - (B) the [purchaser](/usc/15/1701.md?p=10) or lessee of such real estate is a duly organized corporation, partnership, trust, or business entity engaged in commercial or industrial business;
    - (C) the [purchaser](/usc/15/1701.md?p=10) or lessee of such real estate is represented in the transaction of sale or lease by a representative of its own selection;
    - (D) the [purchaser](/usc/15/1701.md?p=10) or lessee of such real estate affirms in writing to the seller or lessor that it either (i) is purchasing or leasing such real estate substantially for its own use, or (ii) has a binding commitment to sell, lease, or sublease such real estate to an entity which meets the requirements of [subparagraph (B)](#a-8-B), is engaged in commercial or industrial business, and is not affiliated with the seller, lessor, or [agent](/usc/15/1701.md?p=6) thereof; and
    - (E) a policy of title insurance or a title opinion is issued in connection with the transaction showing that title to the real estate purchased or leased is vested in the seller or lessor, subject only to such exceptions as may be approved in writing by such [purchaser](/usc/15/1701.md?p=10) or the lessee prior to recordation of the instrument of conveyance or execution of the lease, but (i) nothing herein shall be construed as requiring the recordation of a lease, and (ii) any [purchaser](/usc/15/1701.md?p=10) or lessee may waive, in writing in a separate document, the requirement of this subparagraph that a policy of title insurance or title opinion be issued in connection with the transaction.
- (b) **Sale or lease of lots subject to other statutory registration and disclosure requirements—** Unless the method of disposition is adopted for the purpose of evasion of this chapter, the provisions requiring registration and disclosure (as specified in [section 1703(a)(1) of this title](/usc/15/1703.md?p=a-1) and sections [1704](/usc/15/1704.md) through [1707](/usc/15/1707.md) of this title) shall not apply to—
  - (1) the sale or lease of lots in a [subdivision](/usc/15/1701.md?p=3) containing fewer than one hundred lots which are not exempt under [subsection (a)](#a);
  - (2) the sale or lease of lots in a [subdivision](/usc/15/1701.md?p=3) if, within the twelve-month period commencing on the date of the first sale or lease of a lot in such [subdivision](/usc/15/1701.md?p=3) after the effective date of this subsection, or on such other date within that twelve-month period as the [Director](/usc/15/1701.md?p=1) may prescribe, not more than twelve lots are sold or leased, and the sale or lease of the first twelve lots in such [subdivision](/usc/15/1701.md?p=3) in any subsequent twelve-month period, if not more than twelve lots have been sold or leased in any preceding twelve-month period after the effective date of this subsection;
  - (3) the sale or lease of lots in a [subdivision](/usc/15/1701.md?p=3) if each noncontiguous part of such [subdivision](/usc/15/1701.md?p=3) contains not more than twenty lots, and if the [purchaser](/usc/15/1701.md?p=10) or lessee (or spouse thereof) has made a personal, on-the-lot inspection of the lot purchased or leased, prior to signing of the contract or [agreement](/usc/15/7a.md?p=2) to purchase or lease;
  - (4) the sale or lease of lots in a [subdivision](/usc/15/1701.md?p=3) in which each of the lots is at least twenty acres (inclusive of easements for ingress and egress or public utilities);
  - (5) the sale or lease of a lot which is located within a municipality or county where a unit of [local government](/usc/15/34.md?p=1) specifies minimum standards for the development of [subdivision](/usc/15/1701.md?p=3) lots taking place within its boundaries, when—
    - (A)
      - (i) the [subdivision](/usc/15/1701.md?p=3) meets all local codes and standards, and (ii) each lot is either zoned for single family residences or, in the absence of a zoning ordinance, is limited exclusively to single family residences;
    - (B)
      - (i) the lot is situated on a paved street or highway which has been built to standards applicable to streets and highways maintained by the unit of [local government](/usc/15/34.md?p=1) in which the [subdivision](/usc/15/1701.md?p=3) is located and is acceptable to such unit, or, where such street or highway is not complete, a bond or other surety acceptable to the municipality or county in the full amount of the cost of completing such street or highway has been posted to assure completion to such standards, and (ii) the unit of [local government](/usc/15/34.md?p=1) or a homeowners association has accepted or is obligated to accept the responsibility of maintaining such street or highway, except that, in any case in which a homeowners association has accepted or is obligated to accept such responsibility, a good faith written estimate of the cost of carrying out such responsibility over the first ten years of ownership or lease is provided to the [purchaser](/usc/15/1701.md?p=10) or lessee prior to the signing of the contract or [agreement](/usc/15/7a.md?p=2) to purchase or lease;
    - (C) at the time of closing, potable water, sanitary sewage disposal, and electricity have been extended to the lot or the unit of [local government](/usc/15/34.md?p=1) is obligated to install such facilities within one hundred and eighty days, and, for [subdivisions](/usc/15/1701.md?p=3) which do not have a central water or sewage disposal system, rather than installation of water or sewer facilities, there must be assurances that an adequate potable water supply is available year-round and that the lot is approved for the installation of a septic tank;
    - (D) the contract of sale requires delivery of a warranty deed (or, where such deed is not commonly used in the jurisdiction where the lot is located, a deed or grant which warrants that the grantor has not conveyed the lot to another [person](/usc/15/1701.md?p=2) and that the lot is free from encumbrances made by the grantor or any other [person](/usc/15/1701.md?p=2) claiming by, through, or under him) to the [purchaser](/usc/15/1701.md?p=10) within one hundred and eighty days after the signing of the sales contract;
    - (E) at the time of closing, a title insurance binder or a title opinion reflecting the condition of the title shall be in existence and issued or presented to the [purchaser](/usc/15/1701.md?p=10) or lessee showing that, subject only to such exceptions as may be approved in writing by the [purchaser](/usc/15/1701.md?p=10) or lessee at the time of closing, marketable title to the lot is vested in the seller or lessor;
    - (F) the [purchaser](/usc/15/1701.md?p=10) or lessee (or spouse thereof) has made a personal, on-the-lot inspection of the lot purchased or leased, prior to signing of the contract or [agreement](/usc/15/7a.md?p=2) to purchase or lease; and
    - (G) there are no [offers](/usc/15/1701.md?p=11), by direct mail or telephone solicitation, of gifts, trips, dinners, or other such promotional techniques to induce prospective [purchasers](/usc/15/1701.md?p=10) or lessees to visit the [subdivision](/usc/15/1701.md?p=3) or to purchase or lease a lot;
  - (6) the sale or lease of a lot, if a mobile home is to be erected or placed thereon as a residence, where the lot is sold as a homesite by one party and the home by another, under contracts that obligate such sellers to perform, contingent upon the other seller carrying out its obligations so that a completed mobile home will be erected or placed on the completed homesite within a period of two years, and provide for all funds received by the sellers to be deposited in escrow accounts (controlled by parties independent of the sellers) until the transactions are completed, and further provide that such funds shall be released to the buyer on demand without prejudice if the land with the mobile home erected or placed thereon is not conveyed within such two-year period. Such homesite must conform to all local codes and standards for mobile home [subdivisions](/usc/15/1701.md?p=3), if any, must provide potable water, sanitary sewage disposal, electricity, access by roads, the [purchaser](/usc/15/1701.md?p=10) must receive marketable title to the lot, and where common facilities are to be provided, they must be completed or fully funded;
  - (7)
    - (A) the sale or lease of real estate by a [developer](/usc/15/1701.md?p=5) who is engaged in a sales operation which is intrastate in nature. For purposes of this exemption, a lot may be sold only if—
      - (i) the lot is free and clear of all liens, encumbrances, and adverse claims;
      - (ii) the [purchaser](/usc/15/1701.md?p=10) or lessee (or spouse thereof) has made a personal on-the-lot inspection of the lot to be purchased or leased;
      - (iii) each purchase or lease [agreement](/usc/15/7a.md?p=2) contains—
        - (I) a clear and specific statement describing a good faith estimate of the year of completion of, and the party responsible for, providing and maintaining the roads, water facilities, sewer facilities and any existing or promised amenities; and
        - (II) a nonwaivable provision specifying that the contract or [agreement](/usc/15/7a.md?p=2) may be revoked at the option of the [purchaser](/usc/15/1701.md?p=10) or lessee until midnight of the seventh day following the signing of such contract or [agreement](/usc/15/7a.md?p=2) or until such later time as may be required pursuant to applicable [State](/usc/15/1701.md?p=9) laws; and
      - (iv) the [purchaser](/usc/15/1701.md?p=10) or lessee has, prior to the time the contract or lease is entered into, acknowledged in writing the receipt of a written statement by the [developer](/usc/15/1701.md?p=5) containing good faith estimates of the cost of providing electric, water, sewer, gas, and telephone service to such lot.
    - (B) As used in subparagraph (A)(i) of this paragraph, the terms “liens”, “encumbrances”, and “adverse claims” do not include United States land patents and similar Federal grants or reservations, property reservations which land [developers](/usc/15/1701.md?p=5) commonly convey or dedicate to local bodies or public utilities for the purpose of bringing public services to the land being developed, taxes and assessments imposed by a [State](/usc/15/1701.md?p=9), by any other public body having authority to assess and tax property, or by a property owners’ association, which, under applicable [State](/usc/15/1701.md?p=9) or local law, constitute liens on the property before they are due and payable or beneficial property restrictions which would be enforceable by other lot owners or lessees in the [subdivision](/usc/15/1701.md?p=3), if—
      - (i) the [developer](/usc/15/1701.md?p=5), prior to the time the contract of sale or lease is entered into, has furnished each [purchaser](/usc/15/1701.md?p=10) or lessee with a statement setting forth in descriptive and concise terms all such liens, reservations, taxes, assessments and restrictions which are applicable to the lot to be purchased or leased; and
      - (ii) receipt of such statement has been acknowledged in writing by the [purchaser](/usc/15/1701.md?p=10) or lessee.
    - (C) For the purpose of this paragraph, a sales operation is “intrastate in nature” if the [developer](/usc/15/1701.md?p=5) is subject to the laws of the [State](/usc/15/1701.md?p=9) in which the land is located, and each lot in the [subdivision](/usc/15/1701.md?p=3), other than those which are exempt under subsection [(a)](#a), [(b)(6)](#b-6), or [(b)(8)](#b-8), is sold or leased to residents of the [State](/usc/15/1701.md?p=9) in which the land is located;
  - (8) the sale or lease of a lot in a [subdivision](/usc/15/1701.md?p=3) containing fewer than three hundred lots if—
    - (A) the principal residence of the [purchaser](/usc/15/1701.md?p=10) or lessee is within the same standard metropolitan statistical area, as defined by the Office of Management and Budget, as the lot purchased or leased;
    - (B) the lot is free and clear of liens (such as mortgages, deeds of trust, tax liens, mechanics liens, or judgments) at the time of the signing of the contract or [agreement](/usc/15/7a.md?p=2) and until a deed is delivered to the [purchaser](/usc/15/1701.md?p=10) or the lease expires. As used in this subparagraph, the term “liens” does not include (i) United States land patents and similar Federal grants or reservations, (ii) property reservations which land [developers](/usc/15/1701.md?p=5) commonly convey or dedicate to local bodies or public utilities for the purpose of bringing public services to the land being developed, (iii) taxes and assessments imposed by a [State](/usc/15/1701.md?p=9), by any other public body having authority to assess and tax property, or by a property owners’ association, which, under applicable [State](/usc/15/1701.md?p=9) or local law, constitute liens on the property before they are due and payable or beneficial property restrictions which would be enforceable by other lot owners or lessees in the [subdivision](/usc/15/1701.md?p=3), or (iv) other interests described in regulations prescribed by the [Director](/usc/15/1701.md?p=1);
    - (C) the [purchaser](/usc/15/1701.md?p=10) or lessee (or spouse thereof) has made a personal on-the-lot inspection of the lot to be purchased or leased;
    - (D) each purchase or lease [agreement](/usc/15/7a.md?p=2) contains (i) a clear and specific statement describing a good faith estimate of the year of completion of and the party responsible for providing and maintaining the roads, water facilities, sewer facilities and any existing or promised amenities; and (ii) a nonwaivable provision specifying that the contract or [agreement](/usc/15/7a.md?p=2) may be revoked at the option of the [purchaser](/usc/15/1701.md?p=10) or lessee until midnight of the seventh day following the signing of such contract or [agreement](/usc/15/7a.md?p=2) or until such later time as may be required pursuant to applicable [State](/usc/15/1701.md?p=9) laws;
    - (E) the [purchaser](/usc/15/1701.md?p=10) or lessee has, prior to the time the contract or lease is entered into, acknowledged in writing receipt of a written statement by the [developer](/usc/15/1701.md?p=5) setting forth (i) in descriptive and concise terms all liens, reservations, taxes, assessments, beneficial property restrictions which would be enforceable by other lot owners or lessees in the [subdivision](/usc/15/1701.md?p=3), and adverse claims which are applicable to the lot to be purchased or leased, and (ii) good faith estimates of the cost of providing electric, water, sewer, gas, and telephone service to such lot;
    - (F) the [developer](/usc/15/1701.md?p=5) executes and supplies to the [purchaser](/usc/15/1701.md?p=10) a written instrument designating a [person](/usc/15/1701.md?p=2) within the [State](/usc/15/1701.md?p=9) of residence of the [purchaser](/usc/15/1701.md?p=10) as his [agent](/usc/15/1701.md?p=6) for service of process and acknowledging that the [developer](/usc/15/1701.md?p=5) submits to the legal jurisdiction of the [State](/usc/15/1701.md?p=9) in which the [purchaser](/usc/15/1701.md?p=10) or lessee resides; and
    - (G) the [developer](/usc/15/1701.md?p=5) executes a written affirmation to the effect that he has complied with the provisions of this paragraph, such affirmation to be given on a form provided by the [Director](/usc/15/1701.md?p=1), which shall include the following: the name and address of the [developer](/usc/15/1701.md?p=5); the name and address of the [purchaser](/usc/15/1701.md?p=10) or lessee; a legal description of the lot; an affirmation that the provisions of this paragraph have been complied with; a statement that the [developer](/usc/15/1701.md?p=5) submits to the jurisdiction of this title with regard to the sale or lease; and the signature of the [developer](/usc/15/1701.md?p=5); or
  - (9) the sale or lease of a condominium unit that is not exempt under [subsection (a)](#a).
- (c) **Rules and regulations—** The [Director](/usc/15/1701.md?p=1) may from time to time, pursuant to rules and regulations issued by him, exempt from any of the provisions of this chapter any [subdivision](/usc/15/1701.md?p=3) or any lots in a [subdivision](/usc/15/1701.md?p=3), if he finds that the enforcement of this chapter with respect to such [subdivision](/usc/15/1701.md?p=3) or lots is not necessary in the public interest and for the protection of [purchasers](/usc/15/1701.md?p=10) by reason or the small amount involved or the limited character of the public offering.
- (d) **“Condominium unit” defined—** For purposes of [subsection (b)](#b), the term “condominium unit” means a unit of residential or commercial property to be designated for separate ownership pursuant to a condominium plan or declaration provided that upon conveyance—
  - (1) the owner of such unit will have sole ownership of the unit and an undivided interest in the common elements appurtenant to the unit; and
  - (2) the unit will be an improved lot.

## Source credit

(Pub. L. 90–448, title XIV, § 1403, Aug. 1, 1968, 82 Stat. 590; Pub. L. 91–152, title IV, § 411, Dec. 24, 1969, 83 Stat. 398; Pub. L. 93–383, title VIII, § 812(b), Aug. 22, 1974, 88 Stat. 736; Pub. L. 95–557, title IX, § 907, Oct. 31, 1978, 92 Stat. 2127; Pub. L. 96–153, title IV, § 402, Dec. 21, 1979, 93 Stat. 1123; Pub. L. 111–203, title X, § 1098A(1), July 21, 2010, 124 Stat. 2105; Pub. L. 113–167, § 1(a), Sept. 26, 2014, 128 Stat. 1882.)

## Notes

### Editorial Notes

### References in Text

The effective date of this subsection, referred to in subsec. (b)(2), probably means the effective date of title IV of Pub. L. 96–153, section 402 of which amended subsec. (b) of this section generally. For the effective date of title IV, see section 410 of Pub. L. 96–153, set out as an Effective Date of 1979 Amendment note under section 1701 of this title.

### Amendments

2014—Subsec. (b)(9). Pub. L. 113–167, § 1(a)(1), added par. (9).

Subsec. (d). Pub. L. 113–167, § 1(a)(2), added subsec. (d).

2010—Subsecs. (b)(2), (8)(B), (G), (c). Pub. L. 111–203 substituted “Director” for “Secretary”.

1979—Subsec. (a). Pub. L. 96–153 revised existing provisions formerly set out as pars. (1) to (11) into pars. (1) to (8) and, as so revised, substituted provisions relating to sale or lease of lots in a subdivision containing less than twenty-five lots, etc., for provisions relating to sale or lease of real estate not pursuant to a common promotional plan to offer or sell fifty or more lots in a subdivision, etc.

Subsec. (b). Pub. L. 96–153 revised existing provisions formerly set out as pars. (1) to (7) into pars. (1) to (8) and, as so revised, substituted provisions setting forth criteria respecting sale or lease of lots subject to other statutory registration and disclosure requirements, for provisions setting forth criteria respecting sale or lease of lots in municipality or county with minimum standards.

1978—Subsec. (a)(3). Pub. L. 95–557, § 907(a)(1), inserted “condominium” after “commercial”.

Subsec. (a)(10). Pub. L. 95–557, § 907(a)(2), inserted “United States land patents or Federal grants and reservations similar to United States land patents, nor to” after “do not refer to”.

Subsec. (a)(11). Pub. L. 95–557, § 907(a)(3), inserted “or which is restricted to such use by a declaration of covenants, conditions, and restrictions which has been recorded in the official records of the city or county in which such real estate is located” before “when”.

Subsecs. (b), (c). Pub. L. 95–557, § 907(b)(1), (2), added subsec. (b) and redesignated former subsec. (b) as (c).

1974—Subsec. (a)(11). Pub. L. 93–383 added par. (11).

1969—Subsec. (a)(10). Pub. L. 91–152 substituted provisions requiring a personal on-the-lot inspection of the real estate for provisions requiring a personal inspection of the lot and restricted definition of terms “liens”, “encumbrances”, and “adverse claims” so as not to include taxes and assessments imposed by a State, a public body having authority to assess and tax property, or a property owners’ association, which, under the applicable law, constitute liens before they are due and payable, and so as not to include beneficial property restrictions enforceable by other lot owners or lessees in the subdivision under the specified conditions.

### Statutory Notes and Related Subsidiaries

### Effective Date of 2014 Amendment

Pub. L. 113–167, § 2, Sept. 26, 2014, 128 Stat. 1882, provided that: “The amendments made by this Act [amending this section] shall take effect 180 days after the date of the enactment of this Act [Sept. 26, 2014].”

### Effective Date of 2010 Amendment

Amendment by Pub. L. 111–203 effective on the designated transfer date, see section 1100H of Pub. L. 111–203, set out as a note under section 552a of Title 5, Government Organization and Employees.

### Effective Date of 1979 Amendment

Amendment by Pub. L. 96–153 effective on effective date of regulations implementing such amendment, but in no case later than six months following Dec. 21, 1979, except that subsec. (b)(7) shall be effective on Dec. 21, 1979, see section 410 of Pub. L. 96–153, set out as a note under section 1701 of this title.

### Effective Date

Section effective upon the expiration of two hundred and seventy days after Aug. 1, 1968, see section 1423 of Pub. L. 90–448, set out as a note under section 1701 of this title.