Thursday, September 23, 2010

Major Development for Condo Developers and Buyers: Does the Interstate Land Sales Full Disclosure Act Control Sales?

A Federal judge in Manhattan rules yesterday that condo sales at buildings of more than 100 units are regulated by the Interstate Land Sales Full Disclosure Act.

He's wrong.

I know the act very well and had a very long and extensive review of the Act on my investinginland.com website.  The Act (Chapter 42 of Title 15 of the U.S. Code) has numerous exemptions (Section 1702) and condo sales are one of them.  In addition, since buyers are prohibited from recording their contracts under most condo sales agreements the Act once again does not apply.

This is a truly dumb decision by Judge P. Kevin Castel.  Even the extremely liberal Attorney General of New York, Andrew Cuomo, had rejected this reasoning in the very same case for the very same buyers.

If I was a condo developer or a buyer looking to get out of a condo sales contract I'd follow this ruling very closely.

This decision, if affirmed by an equally dumb appeals court, could literally put hundreds of developers out of business for good.