ILSA rulings could lead to more lawsuits

New York /
Oct.October 20, 2010 06:00 PM

Adam Leitman Bailey

A series of recent rulings in New York and other states allowing buyers to recoup their deposits after backing out of signed contracts has enraged developers, the New York Times reported. The buyers are successfully using a 1968 federal law — known as Interstate Land Sales Full Disclosure Act –intended to protect buyers of out-of-state land from corrupt developers or brokers. But instead, attorneys for these buyers are finding fault in wording that technically violates the law in contracts or other documentation. Lawyers have won back deposits for errors as simple as failing to give buyers a legal description of the property. Experts say that these decisions could lead to more buyer lawsuits. “The crash of the market resulted in people losing their jobs, No. 1, and No. 2, the tightening of the credit market meant they couldn’t get the loans they needed to buy the property,” said attorney Adam Leitman Bailey, who has represented buyers in several cases involving ILSA. “We had to find some law to help these people, and that’s what ILSA did. Desperation inspired creativity.” A handful of recent ILSA cases saw judges finding in favor of buyers. Earlier this month, at 20 Pine Street in Lower Manhattan, a judge denied an attempt by the sponsors to have two cases brought forward by buyers thrown out. In September, a judge ruled against Related Companies in an ILSA case, order the developer to return a $510,000 deposit on a unit at the Brompton on the Upper East Side. [NYT]

 

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