The Second Circuit Court of Appeals has taken the opportunity to clarify the requirements of the Interstate Land Sales Full Disclosure Act (“ILSA”), a statute that, while enacted more than forty years ago, has received little attention from the federal courts until recently. In basic terms, ILSA protects individual buyers or lessees who purchase or lease lots in large, uncompleted housing developments, including condominiums, by mandating that developers make certain disclosures. If a developer fails to provide these disclosures, ILSA permits buyers or lessees, under certain circumstances, to revoke their purchase or lease agreements within a designated period from the date of signing. As the Eleventh Circuit Court of Appeals observed recently, it is this feature of ILSA that has made the statute “an increasingly popular means of channeling buyer’s remorse into a legal defense to a breach of contract claim.”
Potential buyers have been awarded their contract deposits because the contracts of sale, as opposed to, the description of the lots, were not in a form acceptable for recording. The Second Circuit clarified ILSA, stating that the description of the lot is what needed to be acceptable for recording and not the entire contract of sale. The question now remains, will the developers, who paid out millions of dollars over the last few years, attempt to claw back their funds.