As the development market slows contract purchasers will look for creative ways to get out of purchase contracts. Did you consider the Interstate Land Sales Full Disclosure Act (”ILSA”) 15 U.S.C. 1702 (a) when programming your development project ?
The ILSA is a federal consumer protection statute which the U. S. Department of Housing and Urban Development administers which requires disclosures and contract provisions relating to the sale of land, including commercial, industrial and residential subdivisions, townhome developments and condominium projects.
Compliance is time consuming and costly. So developers will want determine if their projects qualify for one of the several full or partial exemptions to compliance with the ILSA provisions. There are two (2) popular exemptions: (i) “Improved Lot exemption” which is a promise of the developer to complete the project within 2 years of the date of the contract to sell a unit to a consumer; and (ii)"fewer than 100 units" exemption.
Failure to comply can be costly. The ILSA provides statutory remedies to contract purchasers of return of earnest money deposits, monetary damages and specific performance. Much of the reported case law emanates from Florida. However, there is a line of cases from the 6th Circuit. Avoid the headaches and plan accordingly. Discuss the ILSA and its application to your project with your real estate counsel.
No comments:
Post a Comment