Mr. Speaker, I yield myself such time as I may consume. I thank my colleague from the Financial Services Committee, Mr. McHenry. This is one of many bills that we have worked together on in a…
Mr. Speaker, I yield myself such time as I may consume.
I thank my colleague from the Financial Services Committee, Mr. McHenry. This is one of many bills that we have worked together on in a bipartisan way.
The Interstate Land Sales Full Disclosure Act, known as ILSA, was enacted in 1969 to protect consumers from being cheated in land deals. It was originally intended to protect out-of-State buyers who were sold land that was not what it was advertised to be and to provide a right of action to rescind the contract and walk away from the deal. However, due to ambiguities in the original law, courts have ruled over the years that ILSA applies to condominiums and that developers are required to file redundant paperwork and make disclosures that are completely nonsensical when applied to condo units.
This has led to absurd results. For example, ILSA requires condo developers to file a report that discloses, among other things, information about the condo unit's topography, how much of the condo is covered by water, whether there is any soil erosion, and whether the condominium has any oil and gas rights.
I, for one, don't know of any high-rise condo units that are covered by water. Requiring condo developers to file these types of nonsensical disclosures provides no consumer protection whatsoever and simply generates unnecessary paperwork.
Unfortunately, during the economic downturn in 2008, some buyers used the recording requirements of ILSA to rescind otherwise valid contracts for economic reasons, an unintended consequence of the act and its intent. The law now needs a technical fix to distinguish condominium sales from other types of land sales and to recognize the unique conditions under which these units are sold in today's market.
As the author of the Credit Cardholders' Bill of Rights, I am a strong supporter of consumer protections. I fully support the consumer protections that were enacted through ILSA, and this proposed legislation does nothing to affect those consumer protections; but I also believe that we need to make distinctions for condos in order to allow the condominium development industry to rebound from the recession. The bill would only exempt condos from ILSA's registration requirements. It will maintain the consumer protections which ensure that consumers still have the right to rescind contracts in cases of actual fraud. Developers would, of course, still be required to comply with State laws that require specific disclosures.
As we recover in this still very fragile economy, we want to encourage, not discourage, buyers and sellers to enter into real estate deals responsibly. That is why this bill is important--to ensure development and the return of an important industry in our country, that of residential condominium sales.
I urge my colleagues to support this bill, and I reserve the balance of my time.
Mr. Speaker, I yield 5 minutes to my distinguished colleague from the great State of New York, Jerry Nadler.
Mr. Speaker, I have no further requests for time, and I yield back the balance of my time.
Support H.R. 2600, the Interstate Land Sales Disclosure Act Update of
2013
Dear Colleague: The Interstate Land Sales Disclosure Act
was enacted in 1969 to protect out-of-state buyers who were
sold raw, undeveloped land that was not what was advertised,
and provides a right of action to rescind the contract and
walk away from the deal.
Senator Harrison Williams, who introduced the original
bill, noted that the land sales that ILSA was intended to
address were sales of ``swamps, deserts, high arid plateaus,
mountains, remote valleys, and--in some cases--actual jungles
or lava beds outside the continental United States.''
However, due to ambiguity in the statute, courts have ruled
over the years that ISLA applies to condominiums, and
developers are now required to mate redundant disclosures
that make no sense whatsoever when applied to condo units.
For example, ILSA requires developers to disclose whether
there is any soil erosion in the condo, whether the condo
unit is covered by water, and information about the condo
unit's oil, gas, and mineral rights.
During the economic downturn, some buyers have used ILSA to
rescind otherwise valid contracts for economic reasons--an
entirely unintended consequence of the law and its intent.
The law now needs a technical fix to distinguish condominium
sales from other types of land sales and to recognize the
unique conditions under which these units are sold in today's
market.
H.R. 2600 explicitly exempts condominiums from ILSA's
registration requirements, but maintains ILSA's consumer
protections by ensuring that condominiums are still subject
to the statute's anti-fraud provisions. In addition,
developers would still be required to comply with all of the
normal state- and local-level disclosure requirements that
apply to condo sales.
As we recover in this still fragile economy, we want to
encourage, not discourage, buyers and sellers to enter into
real estate deals responsibly. For these reasons, we hope
that you will join us in voting for H.R. 2600 later today.
Sincerely,
Carolyn B. Maloney,
Member of Congress.
Jerrold Nadler,
Member of Congress.
