Mrs. MALONEY. Mr. Speaker, I rise along with my colleague Rep. McHenry to introduce the Interstate Land Sales Disclosure Act Update of 2012.
The Interstate Land Sales Disclosure Act was enacted in 1969 to protect consumers from being sold property where the property's description in the contract and related materials was not what was to be delivered to the buyer.
It was intended to protect out-of-state buyers who were sold land that was not what was advertised and provides a right of action to rescind the contract and walk away from the deal. However, Courts have ruled over the years that ISLA applies to condominiums, and developers are required to file redundant paperwork that is unnecessary and out of keeping with modern condominium development.
During the economic downturn, some buyers have used the recording requirements of ILSA to rescind otherwise valid contracts for economic reasons, an unintended consequence of the act and its intent. The law now needs a technical fix to distinguish condominium sales from other types of land sales and to recognize the unique conditions under which these units are sold in today's market.
I fully support the consumer protections that were enacted through ILSA, and this proposed legislation does nothing to affect those protections. But I also believe that we need to make distinctions for condominiums in order to allow the condominium development industry to rebound from the recession. The bill would only exempt condominiums from ILSA's registration requirements but will maintain the consumer protections to ensure consumers still have the right to rescind contracts in cases of fraud. Developers would, of course, still be required to comply with state laws that require specific disclosures.
As we recover in this still fragile economy, we want to encourage, not discourage, buyers and sellers to enter into real estate deals responsibly.
That is why this bill is important to ensure development and the return of an important industry in our country, residential condominium sales. I urge my colleagues to support this legislation.