Adam Leitman Bailey, P.C. Prevails in Getting Condo Units’ Contracts Terminated
A group of individuals and families contracted to purchase condominium units in the 123 Washington Condominium in late 2007 and early 2008 for purchase prices exceeding $1,000,000 each. The unit owners later wanted to terminate their contracts and turned to Adam Leitman Bailey, P.C. for help.
When the purchase agreements were signed, the units were not yet constructed, and the agreements did not require that construction be complete within two years. Any contract or purchase agreement for the sale of a lot which is in violation of the Interstate Land Sales Full Disclosure Act of 1968 (ILSFDA) is subject to rescission by the purchase within a two-year period from the date of signing.
The team at Adam Leitman Bailey, P.C. had a difficult task ahead, but the attorneys knew what they had to do. Adam Leitman Bailey, P.C. prevailed in arguing that that the condominium units were in fact subject to the requirements of ILSFDA. Therefore, the condominium was required by law to register with HUD and provide the unit owners with a property report in their purchase agreement.
Adam Leitman Bailey, P.C. showed that 123 Washington had failed to properly register with the U.S. Department of Housing (HUD) as required by ILSFDA prior to entering the purchase agreements. On October 11, 2007, 123 Washington submitted its Initial Registration Application to HUD; however, on November, 7, 2007, HUD informed the condominium that the application was materially deficient. HUD ordered 123 Washington not to sell any of its lots until the deficiencies were remedied. The purchase agreements of Adam Leitman Bailey, P.C.’s clients were all signed and dated during the period in which the HUD suspension was in effect. Thus, Adam Leitman Bailey, P.C. argued that the contracts of the unit owners should be terminated.
The court found in favor of the unit owners, reasoning that the legislative history and HUD’s interpretive analysis dictated that ILSFDA apply to condominiums. The court further ruled that the unit owners’ decision to rescind their contract was not for it to decide. The motion for 123 Washington’s Motion for Judgment on the Pleadings was denied.
The Adam Leitman Bailey, P.C. attorneys who worked on this matter were Adam Leitman Bailey and John M. Desiderio.