The Interstate Land Sales Full Disclosure Act of 1968 (“ILSA”), codified at 15 U.S.C. § 1701 et seq., was enacted in 1968 to protect purchasers of undeveloped property from schemes where developers marketed “subdivisions” which were actually remote plots of land, often located in deserts or underwater, and which were never intended to be developed. The Act makes it unlawful for a developer or agent to sell or lease any nonexempt lot without first registering the development with the Consumer Financial Protection Bureau (the “Bureau”) and providing the purchaser with detailed information about the property prior to the sale. See 15 U.S.C. § 1703. The Act provides numerous exemptions from the requirements of the Act, including exemptions for subdivisions with less than twenty-five lots (§1702(a)(1)), for the sale or lease of improved property (§1702(a)(2)), and for sales to builders (§1702(a)(7)).
The Act provides for criminal and civil penalties, most importantly including a two-year right of rescission where information was not provided to homeowners at the time of the sale. During the recent recession, underwater purchasers have seized on technical breaches of the Act and used the rescission remedy as a means to Continue reading