The federal Interstate Land Sales Full Disclosure Act ("ILSA") can fairly be described as a possible "land mine" for condominium developers, owing to the statute's poorly understood exemption provisions which can be and are subject to competing judicial interpretations. The ILSA exemption morass has been at least partly responsible for the large number of lawsuits which have been filed in recent months in Florida courts by buyers alleging claims under the statute in an effort to recover deposits paid under condo purchase agreements.

However, ILSA is not just potentially treacherous from the developer's point of view. Indeed, the statute poses some significant perils for buyers who may have viable claims, and these pitfalls stem from ILSA's unusually short statute of limitations. In judicial parlance, a statute of limitations can sound a "death knell" to the claims of an unwitting plaintiff. See, e.g., Helton v. Clements, 832 F.2d 332, 336 (5th Cir. 1987).

Most, if not all, ILSA claims originate with respect to a written contract for the purchase and sale of real estate. Under Florida law, the statute of limitations for an action on an obligation under a contract is five years. See section 95.11(2)(b), Florida Statutes. And claims under the Florida state condo statute are governed by a four-year statute of limitations. See section 95.11(3)(f), Florida Statutes. But for claims which arise under the ILSA statute itself (and which are not simply for breach of an obligation under the Purchase Agreement), ILSA sets forth shorter limitation periods as follows:

-- 15 U.S.C. section 1703(b): "Any contract or agreement for the sale or lease of a lot not exempt under section 1702 of this title may be revoked at the option of the purchaser or lessee until midnight of the seventh day following the signing of such contract or agreement or until such later time as may be required pursuant to applicable State laws, and such contract or agreement shall clearly provide this right." (emphasis added).

-- 15 U.S.C. section 1703(c): "In the case of any contract or agreement for the sale or lease of a lot for which a property report is required by this chapter and the property report has not been given to the purchaser or lessee in advance of his or her signing such contract or agreement, such contract or agreement may be revoked at the option of the purchaser or lessee within two years from the date of such signing, and such contract or agreement shall clearly provide this right." (emphasis added).

And with respect to lawsuits brought to enforce rights under ILSA, the statute provides a three-year statute of limitations -- either running from the date the contract was signed, or from the date the discovery of the ILSA violation was made, depending on which right under ILSA is being asserted. See 15 U.S.C. section 1711.

ILSA's statute of limitations framework is not only on the short side, but also confusing on its face. In particular, the two-year revocation window under 1703(c) would seem to be at odds with the three-year period to bring an action provided under 1711. The confusion stems from the fact that in its original form, ILSA provided a two-year (not the present three-year) limitations period for actions. One Florida court has gone so far as to label the apparently conflicting provisions as "rather incongruous." Ni v. Deltona Corp., 701 So. 2d 888, 889 n.3 (Fla. 5th DCA 1997). To date, I have not seen an opinion which adequately reconciles these provisions of ILSA.

Apart from the confusion inherent in ILSA, Florida condo buyers could reasonably be under the impression that all rights which they may have under their Purchase Agreements are governed by statutes of limitations longer than three years. That may be true for state law contract claims (five years) as well as claims under the Florida condo statute (four years), but for claims specifically under ILSA, the limitations period is undoubtedly shorter, and buyers should be careful not to waive rights which they may have and wish to pursue.

By Jared H. Beck, Esq.

This article does not constitute legal advice or the formation of an attorney-client relationship, and is not for re-publication without express permission of the author.

More info on your stop foreclosure information search:

Get Free Foreclosure Advice and Free Refinance Quotes
Get your free on-line foreclosure refinance quote and free advice from foreclosure mitigation specialist in minutes. Compare real offers from top national subprime and hard money lenders... more...

Short Sale Training - The Biggest Short Sale Mistake
I'm writing to let you know about the #1 way to speed up the Short Sale process that very few Realtors actually know about. Not using this strategy is the Biggest Mistake most Short Sale Realtors make. It may not be what you think, because it's not a "traditional" real estate strategy... I can't ... more...

Short Sales - 3 Key Factors Gurus Never Tell You About How To Do Short Sales
For those of you who are new to the Short Sale arena or new to real estate investment, let's first define what a "short sale" is and what it's SUPPOSED to accomplish. A short sale is the process of negotiating with a Mortgage Lender to convince them to accept less than the Homeowner's mortgage ... more...

Short Sale Questions
The main stream media continues to be rich with stories about the struggling real estate market, here in the Sacramento area as well as across the country. They generally revolve around the increasing number of foreclosures, the mortgage crisis and now some of the government programs that may or ... more...

Short Sale 101
This occurs when the net proceeds from the sale of a home are not enough to cover the sellers' mortgage obligations and closing costs, such as property taxes, transfer taxes, and the real estate practitioner's commission. The seller is unwilling or unable to cover the difference. Some ? although by ... more...