The Interstate Land Sales Full Disclosure Act (ILSFDA) was enacted in 1968 to prevent deceptive practices of the sale of unimproved tracts of land by requiring developers to disclose information needed by potential buyers. The original purpose of the act was to protect purchasers from unscrupulous sales of undeveloped home sites, frequently involving out-of-state sales of land purportedly suitable for sale but actually under water or only suitable for grazing.
Most recently the Southern District of New York has ruled that ILSFDA also applies to purchasers of condominium units. Developers who do not follow the procedures provided for under ILSFDA have been required to return the deposits of potential purchasers looking to rescind their contracts of sale. Although developers are arguing that ILSFDA should not be used by purchasers of individual residential units, the Courts are disagreeing and returning deposits to an alarming amount of purchasers who entered into agreements with developers of new construction condominiums. It appears that the old adage of “buyers beware” has been turned on its head.