The Interstate Land Sales Full Disclosure Act: What does it mean for Developers and Condo Purchasers?
As Goethe said “Knowing is not enough; we must apply!” Simply being aware of the Interstate Land Sales Act is not enough, we must learn what It means and then apply that knowledge to rescind contracts or protect ourselves from law suits in the future. Have you heard of the Interstate Land Sales Act? This is a question that developers may soon be facing in courtrooms and arbitrations across the nation.
The Interstate Land Sales Full Disclosure Act 15 U.S.C. §1701 et seq. is being used by home purchasers across the nation but particularly in Florida, Tennessee, Nevada, and New York City as a grounds on which to escape contracts for the purchase of a condominium.
In West Palm Beach, Florida the Palm Beach Post recently announced three lawsuits were filed against the developers of Two City Plaza, City Place South Tower, and City Palms. To date only 166 of the 1.175 units marketed during the height of the Florida real estate craze have closed. The buyers allege that the developers failed to deliver the units within 2 years and are therefore in violation of the Interstate Land Sales Act. Interestingly, several of the plaintiffs said they would have been able to close on the units if they were delivered when promised but due to the current economic situation are unable to do so now.
In Nevada, the Las Vegas Business Press recently reported that a suit has been brought on behalf of 200 homebuyers for condominiums at the Cosmopolitan a 2,998 unit condo-hotel. The Cosmopolitan project which has undergone an ownership change and several interior redesigns is now slated to open in June of 2010, approximately a year behind schedule. The attorneys representing the condo purchasers have amended their complain to include a violation of the Interstate Land Sales Act as the purchasers were never provided a property report as required by the Act prior to signing their purchase contracts.
The Press Register of Alabama has also reported that a condominium project in Orange Beach is now scheduled to open 18 months behind schedule. The developers have obtained extensions from 40 of the 69 owners but are potentially facing a law suit based on the Interstate Land Sales Act. The developers are claiming that they will not be liable under the Act as the units experienced delays due to Hurricane Katrina which destroyed a facility manufacturing pilings for the condo project and that Force Majeure clauses in the contract allow for delays due to an act of God such as the Hurricane. The developers are making efforts to work with the purchasers including partial rebates of the purchase price and $10,000 worth of complimentary upgrades. I will continue to monitor the Phoenix West II project and update my readers if any law suits involving the act are filed.
The Nashville Post has reported several Interstate Land Sales Act law suits against the developers of Ashland City’s Braxton and the Gulch’s Terrazzo and Icon condominium projects. The plaintiffs in these cases allege that the buildings were not constructed within 2 years and that the developer’s failure to provide a property report allows for them to walk away from their contracts with their deposits.
Stay tuned this week for a more in depth discussion of the Interstate Land Sales Act and its various provisions.
