Last week, the U.S. House of Representatives voted unanimously to approve H.R. 2600, which, if ultimately passed, would expressly exempt condominium developments from the Interstate Land Sales Full Disclosure Act (“ILSA”). If a developer fails to satisfy ILSA requirements, a contract purchaser may have revocation rights; so an exemption from ILSA would be a welcome change for condominium developers and lenders.
ILSA (15 U.S.C. 1701 et seq.) is a federal consumer protection law concerning the use of interstate commerce or the mail to sell or lease lots in a subdivision. Unless the subdivision qualifies for certain limited exemptions, a developer must satisfy specific pre-contractual and pre-closing disclosure obligations, and must register the project with the Consumer Financial Protection Bureau (“CFPB”), a creation of Title X of the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Title X”), 12 U.S.C.A. 5511.
Despite the fact that ILSA did not originally contemplate the condominium regime, federal and state courts have held that a condominium unit constitutes a “lot” under ILSA, and regulations reflect the same.
Title X reassigned administrative responsibilities under ILSA from the U.S. Department of Housing and Urban Development to CFPB in July 2011. A link to the Bill Summary and Status can be found HERE.