Interstate Land Sales Full Disclosure Act Amendment

Floor Speech

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Mr. NADLER. Thank you to my colleague from New York (Mrs. Maloney) for bringing this important issue to the floor today and for yielding me the time.

Mr. Speaker, I rise in support of H.R. 2600, a commonsense clarification to the Interstate Land Sales Full Disclosure Act, ILSA, to preserve consumer protections while keeping our economic recovery on track.

More than 40 years ago, Congress passed ILSA to prevent real estate developers from bilking unsuspecting buyers out of their life savings by selling them parcels of land in the middle of a swamp or of a desert. ILSA requires sellers to disclose critical information about the land being sold, including automobile access to the property, the availability of water on a lot, and access for emergency personnel. These disclosure requirements areclearly necessary and appropriate for individuals who are buying land sight unseen.

They do not make sense, however, when you try to apply them to purchases of condominiums in urban high-rise developments. Clearly, a condo in downtown Manhattan or in downtown Dallas will have access to water and emergency services, and purchasers do not need to know about the risk of soil erosion or about the presence of mobile homes within their units on the 15th floor.

Although common sense would dictate otherwise, courts have interpreted the vague statutory and regulatory language of ILSA to apply to condo purchases. While that interpretation has been disputed and discussed over the years, ILSA was rarely an issue in private condo sales until the economy collapsed in 2008; and as mentioned by Mrs. Maloney, in facing tough financial times and underwater mortgages, many condo and co-op buyers began to use a developer's failure to comply with ILSA to void otherwise valid contracts for condo purchases and receive full refunds of their pre-cash down payments. These suits slowed the housing recovery and left many large developments in New York, Florida, and in other States unfinished or unoccupied.

We can all agree that ILSA provides vital consumer protections for land purchasers, but the law should not be used to void valid contracts because of buyer's remorse. The bill before us today provides a simple clarification to explicitly exempt condominium sales from the law's disclosure requirements. To ensure that ILSA continues to provide the highest level of consumer protection, condominium developers will still be required to comply with the law's antifraud provisions. Developers will also be required to continue complying with all State and local disclosure requirements for condominiums.

This bill, Mr. Speaker, is an easy fix to ensure that developers continue to comply with strict reporting requirements, that purchasers have the information they need to make informed decisions, and that our economic recovery remains on track.

I congratulate Mrs. Maloney for bringing this bill to the floor, and I urge my colleagues to vote in favor of it.

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