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On Sept. 26th, 2014, the President signed into law H.R 2600, a bill to amend the Interstate Land Sales Full Disclosure Act (ILSA) to clarify how the Act applies to condominiums. The Senate approved the measure by unanimous consent as one of the last items considered before it adjourned for the election recess. H.R. 2600 (Grimm, R-NY; Maloney, D-NY) is the companion bill to S. 2101, introduced by Senators Schumer (D-NY) and Heller (R-NV). The House approved H.R. 2600 by a vote of 410-0 late in 2013. The measure takes effect 180 days from the date of the bill’s signing.
As amended, the ILSA will treat the sales of condominiums still under development in the same manner as condo sales in completed projects. By doing so, the bill closes the loophole that allowed buyers to use a technicality to rescind otherwise valid real estate contracts due to personal financial reasons or “buyer’s remorse”.
The ILSA protects consumers from purchasing property that is not as advertised by requiring extensive disclosures by project developers. If ILSA disclosure requirements are not fully met, the purchaser may revoke the purchase contract. During the recent economic downturn, as markets softened and some high rise condominium developers lowered their asking prices, some early buyers, who had paid higher initial offering prices for units, used the ILSA’s reporting requirements as the basis to rescind valid real estate contracts.