Delaware Real Estate Law Update: Condominiums No Longer Subject to ILSA
September 25, 2014
Publication| Real Estate Services
On September 18, the U.S. Senate approved S. 2101, which would amend the Interstate Land Sales Full Disclosure Act (ILSA) to exempt condominium developments from its registration requirements. The U.S. House of Representatives had previously approved identical legislation. The bill will now go to the President for signature, which it is expected he will do.
This will be a major change in how ILSA has been applied. Condominiums were not prevalent when ILSA became law in 1968, but federal regulators and some federal courts took the position that condominium units were covered as “lots” under ILSA. Many condominium unit purchasers used ILSA to rescind their contracts when housing prices fell in the most recent recession. By exempting condominiums, projects can be developed without federal regulation or the risk of buyer rescissions after signing the purchase contract.
The bill will become effective 180 days after the President signs the legislation.