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Mrs. CAROLYN B. MALONEY of New York. Mr. Speaker, I yield myself such time as I may consume.
I thank my colleague from the Financial Services Committee, Mr. McHenry. This is one of many bills that we have worked together on in a bipartisan way.
The Interstate Land Sales Full Disclosure Act, known as ILSA, was enacted in 1969 to protect consumers from being cheated in land deals. It was originally intended to protect out-of-State buyers who were sold land that was not what it was advertised to be and to provide a right of action to rescind the contract and walk away from the deal. However, due to ambiguities in the original law, courts have ruled over the years that ILSA applies to condominiums and that developers are required to file redundant paperwork and make disclosures that are completely nonsensical when applied to condo units.
This has led to absurd results. For example, ILSA requires condo developers to file a report that discloses, among other things, information about the condo unit's topography, how much of the condo is covered by water, whether there is any soil erosion, and whether the condominium has any oil and gas rights.
I, for one, don't know of any high-rise condo units that are covered by water. Requiring condo developers to file these types of nonsensical disclosures provides no consumer protection whatsoever and simply generates unnecessary paperwork.
Unfortunately, during the economic downturn in 2008, some buyers 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.
As the author of the Credit Cardholders' Bill of Rights, I am a strong supporter of consumer protections. I fully support the consumer protections that were enacted through ILSA, and this proposed legislation does nothing to affect those consumer protections; but I also believe that we need to make distinctions for condos in order to allow the condominium development industry to rebound from the recession. The bill would only exempt condos from ILSA's registration requirements. It will maintain the consumer protections which ensure that consumers still have the right to rescind contracts in cases of actual fraud. Developers would, of course, still be required to comply with State laws that require specific disclosures.
As we recover in this still very 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, that of residential condominium sales.
I urge my colleagues to support this bill, and I reserve the balance of my time.
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