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REBNY Celebrates Senate Vote to Approve ILSA Reform
September 19, 2014
The Real Estate Board of New York (REBNY) commends the United States Senate on the passage of H.R.2600: The Interstate Land Sales Disclosure Act (ILSA) Update of 2013. This crucial legislation—which was introduced and passed as a result of the advocacy efforts of REBNY, working in partnership with the Real Estate Roundtable—will close a damaging loophole that has allowed condominium purchasers to rescind valid purchase contracts.
In March, 2014, Senator Charles Schumer (D-NY), Senator Dean Heller (R-NV) and Senator Kirsten Gillibrand (D-NY), introduced S.2101, which is an identical companion bill to H.R. 2600. The Senate last night passed the measure by unanimous consent. H.R.2600 was introduced by Congressmembers Carolyn Maloney (D-NY), Michael Grimm (R-NY), Jerrold Nadler (D-NY), and Patrick McHenry (R-NC), last year, and was unanimously passed by the House on September 26, 2013 by a 410-0 vote under suspension of the rules.
“Thanks to Senator Chuck Schumer and his tireless dedication, the Senate is restoring confidence in the condo construction market and reducing unnecessary federal bureaucracy while keeping important fraud protections in place," said REBNY President Steven Spinola. "Together with the tremendous leadership of Congresswoman Maloney, without whom this approval could not have happened, we also applaud and thank Senators Gillibrand and Heller as well as Congressmembers Grimm, Nadler and McHenry for their vision and dedication to this important issue.”
ILSA was originally passed in 1969 to protect consumers from being fraudulently sold property due to misleading advertising. However, beginning in the 1980s, federal court decisions began to apply ILSA to vertical condominiums, and when the real estate market crashed in 2008, purchasers successfully escaped pre-crash contracts by claiming technical violations of ILSA. The courts generally acknowledged that ILSA has become “an increasingly popular means of channeling buyer’s remorse.”
H.R.2600 exempts condominium developments from ILSA filing and registration requirements, and subsequently provides condominium developers and their lenders some certainty as the economy continues to recover. By exempting condominium developments from portions of ILSA, Congress is closing this unintended loophole and providing tremendous bureaucratic relief from substantial filings that are duplicative—and sometimes contradictory—to many states’ disclosure requirements.
Significantly, the amendment to H.R. 2600 is limited to ILSA’s paperwork and filing requirements. The bill respects and does not amend ILSA’s substantive structure to protect buyers of real property—including new condo units—from misrepresentation, and maintains a purchaser’s right to rescind contracts in cases of actual fraud.
The Real Estate Board of New York lauds and congratulates the extraordinary, bipartisan efforts of Senators Schumer, Gillibrand, and Heller, along with Representatives Maloney, Grimm, Nadler and McHenry. Their dedication, leadership, and ability to come together across parties and between chambers are responsible for the unanimous support for this bill. REBNY would also like to commend the hard work of the Real Estate Roundtable, who was a tireless champion of H.R.2600, as well as the technical expertise and support provided by Jay Neveloff and his team at the law firm of Kramer Levin.
About The Real Estate Board of New York
The Real Estate Board of New York is the city’s leading real estate trade association with more than 15,000 members. REBNY represents major commercial and residential property owners and builders, brokers and managers, banks, financial service companies, utilities, attorneys, architects, contractors and other individuals and institutions professionally interested in the city’s real estate. REBNY is involved in crucial municipal matters including tax policy, city planning and zoning, rental conditions, land use policy, building codes and legislation. In addition, REBNY publishes reports providing indicators of market prices for both the residential and commercial sectors. Please visit us online at www.REBNY.com
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