Interstate Land Sale Full Disclosure Act (ILSA)
The Interstate Land Sale Full Disclosure Act (ILSA), originally effective in 1969 was originally passed by Congress to protect consumers from purchasing unbuildable swampland in Florida.  ILSA is patterned after the Securities Law of 1933 and requires land developers to register subdivisions of 100 or more non-exempt lots with the Department of Housing and Urban Development (HUD) and to provide the purchaser with a Property Report disclosure document before signing the sales contract.  

While initially applied to the sale of lots, the courts extended provisions of the act to condominium units in 1985 (Winter v. Hollingsworth Properties, 777 F.2d 1444, 11th Circuit, 1985).  
ILSA is significant in the real estate industry because if a developer has been found to violate its provisions, buyers can rescind sales contracts for up to two years after closing obtaining a full refund of all money paid, and, under certain cases, recover attorney's fees.  (15 U.S.C. section 1703(c))

If a project is required to be registered, a sales contract must contain provisions such as:

  • 20 day right to cure defaults
  • limiting the damages a developer can recover from defaulting buyer to earnest money not exceeding 15% of purchase price
  • a 7 day recission period after signing contract

Full Exemption

  • Sale of land upon which a completed building already exists
  • Sale of land under a contract obligating the seller to erect a "completed building" within two years, and give buyer the rights of specific performance in event of default

Partial Exemption

no filing required, but developer is responsible for maintaining records to demonstrate that requirements were met
  • Development of less than "100 lot" (or unit) is exempt, however developer must comply with certain antifraud provisions such as the sales contract must state when roads, water, sewer, gas, electric, and other amenities promised will be completed
  • In multiple developments or phases with a "common promotional plan", or multiple developers acting as a group, lots will be counted as a single development 
  • Developments of under 25 lots are also exempt for anti-fraud provisions and registration requirements

Combined Exemption

The "Completed building" and the "l00 lot" exemption can be combined such that the first 99 units in a project are deemed to be partially exempt under the "100 lot" exemption, and subsequent units put under contract are exempt under the "completed building" exemption, provided the developer agrees to complete the project within two years.  
Requirements for Non-Exempt 
  • Register by filing with HUD a statement of record and paying a filing fee
  • amend the statement as necessary, as project conditions change
  • file an annual report of activity
  • comply with anti-fraud provisions, ex.  advertising can not conflict with filing statement 
At this date, different federal courts are not in agreement on what is required under the law.  

In October 2007, the US District Court for the Southern District of Florida determined in the case of Pugliesse v. Pukka Development that the "100 lot" exemption applied only if buyers were given the same rights they would have had if the development had been registered.  
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