How much do you know about the Interstate Land Sales Full Disclosure Act? If you made a deposit for a new-construction condo in 2006 and found yourself with a contract but no condo two or three years later, the law might have come up in discussion. Then again, maybe it didn’t — I don’t recall the act being mentioned during our readers’ complaints about GlasHaus or Lexington Park Condominiums. (I have heard it discussed a few times by attorneys and Realtors over the past three years, but never in official, on-the-record conversations.)
The New York Times reports that buyers in New York and other states are successfully voiding their contracts and walking away with their deposits thanks to ILSA, which was passed in 1968 “to protect buyers of out-of-state land from unscrupulous developers or brokers.” According to the Times, “lawyers have won back deposits for errors as simple as failing to give buyers a legal description of the property or to register the building with the Department of Housing and Urban Development, a basic requirement that many companies nonetheless overlooked.”
It’s been several years since I looked at the extent of local developers’ compliance with ILSA. My recollection is that the great majority of high-rise developers in Chicago complied at least with the registration requirement.
I have more than a passing familiarity with ILSA, since I edited a lengthy student comment on the subject for the Wisconsin Law Review in 1974 and read much of the legislative history and hearing transcripts at the time. The Times article puts a questionable emphasis on what it reports as to the historical genesis of the law.
And, despite the Times’ spin, the law was clearly intended to address issues with condo developments that might not be completed within two years.
ILSA claims are not as new or unusual as the Times would have its readers believe, and talking with a few more attorneys would have led the reporter to that conclusion. Many claims were quietly disposed of by the parties without litigation since the ILSA violations were so clear.
Anyone who is at all familiar with the slipshod practices and studied incompetence of many attorneys who represent home buyers won’t be surprised by the fact that many contracts did not contain a legal description.