Partner Todd E. Soloway, Chair of Pryor Cashman’s Real Estate Litigation Group, and Counsel Luisa K. Hagemeier have authored an article, “Applying ILSA to Sales of Condominium Units,” which appeared in the January 11, 2012 edition of The New York Law Journal.
As if the past three years were not hard enough for New York real estate developers, federal courts in the Southern and Eastern Districts of New York, adding insult to injury, have held that pre-construction sales of condominium units fall within the ambit of the Interstate Land Sales Full Disclosure Act, 15 U.S.C. § 1701 et seq. (ILSA), a statute that was intended to apply only to sales of unimproved land. As a result, buyers under certain circumstances were given an automatic right to rescind their purchase agreements within two years of signing if a developer had not complied with ILSA’s disclosure requirements. Although ILSA has both disclosure requirements and anti-fraud provisions, it is the statute’s strict-liability disclosure scheme that has been exploited by condominium purchasers in New York, none of whom has even alleged fraud or injury of any kind.
In their article, Soloway and Hagemeier argue for the correction of the Courts’ recent application of ILSA to certain sales of condominium units in a manner which is inconsistent with the statute’s language and purpose.
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