Back in Autumn, 2010, we wrote that purchasers of condominium units in the New York metropolitan area were invoking the Interstate Land Sales Full Disclosure Act, 15 U.S.C. §§1701-20 (ILSA), to cancel their agreements to purchase condominium units in newly constructed projects. ILSA immediately became a hit for purchasers suffering from “buyer’s remorse” following the precipitous downturn in the real estate market. ILSA allowed buyers to bring an action or a counterclaim to get out of their contracts even though the legislative intent of ILSA was to protect buyers against unscrupulous developers.
Despite the lack of any allegations of breach of contract, fraud or misrepresentation or other commonly raised grounds for rescission, ILSA made it possible for purchasers to revoke arms-length negotiated contracts on the grounds that a developer failed to either register a non-exempt project with HUD or, even if the project was registered, failed to strictly comply with the terms of the statute even in the absence of harm to the purchaser.
More recently, however, the courts have recognized the duplicitous nature of these ILSA claims.
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