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ILSA Back in Spotlight
September 19, 2012
Elected officials, led by Congresswoman Carolyn Maloney, have introduced a bi-partisan bill, the Interstate Land Sales Disclosure Act Update 2012, to give condominium developers and their lenders some clarity about federal disclosure requirements as the economy continues to recover.
Enacted in 1969, the Interstate Land Sales Act (ILSA) was created to protect consumers of undeveloped land, mostly out-of-state buyers, from false advertising and provide a right of action to rescind contracts. ILSA was not intended to regulate built developments and high-rise unit sales.
ILSA was not applied to high-rise condominiums until 2008 when the real estate market crashed and purchasers’ lawyers looked for ways to escape new condo development contracts. Cases were filed in New York, Florida and throughout the country claiming technical violations of ILSA and demanding full rescission of contracts. Judgments in favor of purchasers were devastating to developments and the real estate industry.
This proposed legislation would amend ILSA so that condominiums sales are distinguished from other types of land sales, recognizing the unique conditions under which these units are sold in today’s market.
REBNY supports this bill which would not have been introduced without the wonderful leadership of Rep. Carolyn Maloney (D-NY). We commend Reps. Patrick McHenry (R-NC), Jerrold Nadler (D-NY), and Michael Grimm (R-NY) along with Maloney for their efforts, as well as Senators Charles E. Schumer (D-NY) and Kirsten Gillibrand (D-NY) for their support of the bill in the Senate.
The support from both sides of the aisle speaks volumes on the importance of this legislation and the need to get it passed.
The struggling residential construction market is starting to move again and passing this bill gives developers more certainty with new projects by removing the heavy burden of unnecessary, duplicative and expensive regulations whenever possible. It would clarify developer’s disclosure responsibility and prevent purchasers of legitimate condominium sales from walking away from deals and having a “free option” on new developments.
It is important to note that although the bill will exempt condos from ILSA’s registration requirements, it will maintain all protections for consumers who will still have to the right to rescind contracts in cases of fraud. Furthermore, developers would still be required to comply with state laws that require specific disclosures.
During this crucial time in our economy, passing this legislation would ensure that ILSA will work as intended, without impeding new construction projects and encourage growth in our great city.
In other REBNY News:
Residential real estate’s biggest event of the year will also be this season’s most fashionable at The Real Estate Board of New York’s 24th Annual Residential Deal of the Year Awards and Charity Gala on Thursday, Oct. 25, 2012 at the Metropolitan Pavilion.
The high-fashion theme of the event will honor the most notable residential sales and rental deals, as well as two industry professionals with The Henry Forster Award for lifetime achievement and The Rookie Salesperson of the Year Award.
The Gala will feature the designs of Cesar Galindo who will present his 2013 fashions in a special presentation for guests. There will also be a raffle with prizes from top-name designer. Proceeds from the raffle and the event fund will benefit the REBNY Residential Member in Need Fund, which gives financial grants to REBNY members facing hardship because of a physical illness or family crisis.
Tickets are $425 for individuals and $400 for groups of 10 or more. For more information, contact Jeanne Oliver-Taylor at firstname.lastname@example.org.