Thursday, October 22, 2009

Fourth District Concludes Developer Failed To Comply With The Interstate Land Sales Full Disclosure Act

In Home Devco/Tivoli Isles, LLC v. Silver (4D08-3500), the Fourth District affirmed the trial court's conclusion that the developer failed to comply with the disclosure requirements of the Interstate Land Sales Full Disclosure Act (ILSA), 15 U.S.C. § 1701 et seq.
Congress passed ILSA in 1968 to protect purchasers against unscrupulous sales of undeveloped home sites, frequently involving out of state sales of land purportedly suitable for development but actually under water or useful only for grazing...Among other things, ILSA makes it unlawful to sell or lease non-exempt lots without furnishing the purchaser or lessee with a printed property report meeting statutory standards in advance of the signing of the contract to purchase or lease the property. 15 U.S.C. § 1703 (a)(1)(B). Failure to provide the report as required permits the buyer or lessee to revoke the contract at any time within two years of the date of signing the contract. 15 U.S.C. § 1703 (c). In the event of revocation, the buyer or lessee is entitled to refund of any deposits paid. 15 U.S.C. § 1703(e). ILSA provides an exemption for “the sale or lease of land under a contract obligating the seller or lessor to erect such a building thereon within a period of two years.” 15 U.S.C. § 1702(a)(2). Entitlement to this “two-year” exemption is the crux of this appeal.
The developer relies on the above emphasized clause of the guidelines to argue that it based its contractual exceptions to the two-year completion requirement only on reasons which were beyond its control. However, the contract contained overbroad, catch-all language which sought an exception for any matters beyond its control, many of which would not necessarily rise to contract defenses under Florida law. The majority view appears to be that by seeking such a broad exception to the “two-year rule” the developer loses its exemption.
We follow the reasoning in Stein that broad clauses of this type go well beyond recognized defenses. We conclude that the developer’s sales contract in this case did not contain an unconditional commitment to complete construction within two years. The developer thus was not exempt from the provisions of ILSA.


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