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N.Y. Courts’ Reading of ILSA Is Within Statutory Bounds

By Adam Leitman Bailey


By: Adam Leitman Bailey

January 13th, 2012

As counsel to numerous condominium unit buyers seeking relief under the federal Interstate and Sale Full Disclosure Act (ILSA), including the prevailing plaintiffs in the Bacolitsas and Indomenico cases cited in the article, “Applying ILSA to Sales of Condominium Units,” by Todd E. Soloway and Luisa K. Hagemeier, (Jan. 11), I write to correct the misleading implication that the recent case law by the Southern and Eastern districts holding condominium developments subject to ILSA is somehow unique to New York or otherwise out of the national mainstream.

In fact, since 1977, every state and federal decision addressing the issue has held that ILSA applies to condominiums, with the sole exception of the Florida district court holding reversed by the Eleventh Circuit in Winter v. Hollingsworth that the authors discuss. Among these hundreds of decisions are rulings by the Second, Third, Fourth, Fifth, Sixth and Eleventh circuits as well as the Supreme Courts of Alabama, Delaware and Florida.

More generally, the article ignores that the condominium laws of virtually every state provide that condominium units are to be treated like other forms of real property. Forty-four states plus the District of Columbia have statutes defining condominium units as real property. Twenty-two of those jurisdictions, including New York, expressly provide that condominium units are real property “for all purposes.” Indeed, though most (but not all) New York City condominium units are apartments located above ground within a building, many other condominium units within New York and the rest of the country consist of a single family residence sitting on its own small portion of the earth.

Moreover, numerous non-ILSA statutes and judicial decisions hold that a condominium unit is considered a “lot” of real estate, including the condominium acts of Georgia, Maryland, New Hampshire and Virginia, each of which expressly define the term “lot” to include a condominium unit. Indeed, under the New York Condominium Act, each condominium unit is required to be designated as a separate “tax lot.”

Although I agree with the authors that the meaning of the term “lot” as used in ILSA would have been clearer if Congress had expressly defined it, the unanimous judicial conclusion that, in the absence of a statutory definition, condominium units are “lots” to which ILSA applies is well within the bounds of proper statutory interpretation.

 

Adam Leitman Bailey, P.C.

NEW YORK REAL ESTATE ATTORNEYS