SPONSORS BEWARE: A few months ago, I posted an article concerning the reversal of a lower court decision involving the Interstate Land Sales Full Disclosure Act (“ILSA”), which was initially decided in favor of the developers of two New York condominium buildings- Harlem’s Fifth on the Park Condominium and One Hunters Point Condominium in Long Island City.
As you may recall, ILSA is a federal law enacted to help protect buyers from fraud in new real-estate subdivisions. If a developer fails to provide the proper disclosure, buyers may seek to rescind their contracts within two years of signing.
In November 2010, buyers at another development, Flushing’s Sky View Parc complex, filed suit alleging that the developers did not meet ILSA requirements by failing to disclose “substantial problems” with the development, including cost overruns and loan restructuring. The parties have now settled and the buyers will receive a 75% refund on their downpayments with the developer returning $3.69 million of the $50 million it was holding in downpayments.
The agreement was described by the buyers’ attorney as the “largest [ILSA] settlement on record in New York.”
With this latest development, it appears that lawsuits using ILSA as a basis for getting out of contracts signed before the financial collapse are becoming more and more successful.
By Nahum M. Palesfki, Esq.