Last month, a Federal District Court judge presiding over a suit brought by purchasers at the 505 Condominium in Hell’s Kitchengranted the purchasers’ motion for relief and overturned an earlier verdict for the developers, citing the reversal in a similar ILSA litigation brought by purchasers at the Fifth on the Park Condominium (click here for our post on the Fifth on the Park case).
As you may recall from that post, in overturning the District Court’s decision, the Second Circuit Court of Appeals sided with the buyers at Fifth on the Park and ruled that ILSA’s 100-lot exemption is determined as of the time the purchaser signs a contract, and not, as the developers argued, at some point in the future, when the developer in fact sells 100 or more non-exempt units.
The developers of the 505 Condominium argued that “because 12 of the 108 units in the condominium ‘were completed and ready for occupancy before contracts were executed for any of them’, those 12 units fall within the improved-lot exemption and the remaining 96 units, which would include [the purchasers’] units, would then fall within the 100–lot exemption.”
Judge McKenna rejected these arguments and found in favor of the purchasers reversing his earlier ruling, since that earlier ruling was based solely on the Court’s verdict in favor of the developers in the Fifth on the Park case.
Commentators have pointed out that the result in the 505 case, together with other similar ILSA decisions, have firmly cemented the position that ILSA, in fact, applies to condominiums s in NYC.
Nahum M. Palefski, Esq.