The House of Representatives, led by NY Congressmembers Carolyn Maloney, Michael Grimm, Jerrold Nadler, and Patrick McHenry, passed suspension bill H.R. 2600: The Interstate Land Sales Disclosure Act Update of 2013, which exempts condominium developments from ILSA filing and registration requirements.
ILSA was passed in 1969 to protect consumers from being fraudulently sold property due to misleading advertising. However, beginning in the 1980’s 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 claiming technical violations of ILSA. The courts generally acknowledged that ILSA has become “an increasingly popular means of channeling buyer’s remorse.
By exempting condominium developments from portions of ILSA, Congress is closing this loophole and providing relief from substantial filings that are duplicative, and sometimes contradictory, to state disclosure requirements. The Interstate Land Sales Disclosure Act Update of 2013 retains ILSA’s anti-fraud provisions, maintaining a purchaser’s right to rescind contracts in cases of fraud.
Senators Schumer and Gillibrand, who sponsored the bill in the Senate, are expected to reintroduce the bill in the Senate for vote there in the near future.
The house bill is a result of REBNY's (The Real Estate Board of New York) advocacy efforts.