Interstate Land Sales Full Disclosure Act (ILSFDA)

Overview

The Interstate Land Sales Full Disclosure Act (ILSFDA) is a U.S. federal law enforced by the U.S. Department of Housing and Urban Development (HUD) that mandates certain disclosure and advertising protocols when land is being sold to purchasers in different states. The act was designed to protect consumers from abuses in land sales, specifically through advance disclosure of pertinent information about the land being sold. The primary objective of ILSFDA is to prevent fraudulent and misleading practices in the interstate sale of land.

Key Provisions

1. Disclosure Requirements: Sellers must provide a detailed Property Report to every prospective buyer before the signing of a contract.
2. Registration: Developers must register subdivisions or lands with HUD and supply specific details about the properties.
3. Advertising Restrictions: The Act regulates how the property can be marketed and advertised, requiring transparency.
4. Buyer’s Right to Revoke: Provides buyers with a seven-day right to revoke the purchase contract after receiving the property report.

Examples

1. Pre-Sale Disclosure: A developer in California wants to sell a subdivision plot to buyers in Nevada. According to ILSFDA, they must provide a comprehensive Property Report consisting of all material information like zoning status, utility services, and access roads.
2. Truthful Advertising: An advertisement campaign for selling land in Texas must avoid deceptive or false claims and must adhere to the guidelines set forth by ILSFDA, ensuring that all advertised information is accurate and truthful.

Frequently Asked Questions (FAQs)

Q: Who needs to comply with the Interstate Land Sales Full Disclosure Act?

A: Any developer or seller who is selling parcels of land across state lines in quantities regulated by the Act must comply with ILSFDA.

Q: What information must be included in the Property Report?

A: The Property Report must include information on the property’s legal status, availability of utilities, land use restrictions, mortgages or liens, and special risks alongside other material facts.

Q: Can buyers cancel their purchase contract under ILSFDA?

A: Yes, buyers have the right to cancel their purchase contract for up to seven days after receiving the Property Report.

Q: Are all land sales subject to ILSFDA?

A: Not all interstate land sales are subject to the Act; there are exemptions, such as sales involving parcels of fewer than 100 lots, sales to developers, or resale of improved inventory.

Related Terms

1. Registration of Securities: This involves the process by which a public offering is filed with the Securities and Exchange Commission (SEC) to ensure compliance with regulatory guidelines.
2. Consumer Protection: Laws and organizations designed to ensure the rights of consumers and fair trade, competition, and accurate information in the marketplace.
3. Fraudulent Conveyance: An act involving the illegal transfer of property with the intent to hinder, delay, or defraud creditors.

Online References

1. HUD on Interstate Land Sales
2. Cornell Law School: Interstate Land Sales Full Disclosure Act

Suggested Books for Further Studies

1. “Real Estate Law” by Marianne M. Jennings: Covering comprehensive real estate law, including regulations like ILSFDA.
2. “Principles of Real Estate Practice” by David C. Ling and Wayne R. Archer: Includes chapters on consumer protection laws in real estate.
3. “Textbook of Real Estate Transactions” by Howard A. Goldstein: Detailed insights into various aspects of real estate transactions, including legal requirements of interstate land sales.

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