This is a followup to an earlier blog post on this issue in October, 2013.
Last October, the U.S. House of Representatives voted to approve H.R. 2600, which would have expressly exempted condominium developments from the Interstate Land Sales Full Disclosure Act (“ILSA”). Ultimately, the bill was left to languish during the discussions surrounding the budget. However, just a few weeks ago, an identical bill was introduced in the Senate (S.2101), and was referred to the Committee on Banking, Housing and Urban Affairs. If the bill is eventually passed, it will provide real relief for condominium developers and their lenders.
As of July 21, 2011, the administration and enforcement of ILSA has been the purview of the Consumer Financial Protection Bureau (“CFPB”). Although the CFPB has not yet been particularly active in enforcing ILSA, it has been quite aggressive in its enforcement efforts under other statutes and is expected to be just as aggressive under ILSA once it has put the necessary regulations and guidelines in place. The CFPB intends to make use of consumer complaints to identify targets for investigation and enforcement actions under ILSA. Multiple complaints against the same developer or project could lead to a Civil Investigative Demand which can require the production of documents, answers to interrogatories and/or appearance for testimony.
The CFPB also has the power to initiate administrative proceedings and civil actions and has a wide array of remedies at its disposal, including civil money penalties. With respect to civil penalties, the CFPB has taken the position that it may seek penalties under both the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank Act”) and ILSA. Under the Dodd-Frank Act, the CFPB could seek penalties of up to $1 million per day for each day during which a knowing violation of ILSA occurs. A link to the Bill Summary and Status can be found HERE.