Interstate Land Sales Full Disclosure Act

Definition

The Interstate Land Sales Full Disclosure Act (ILSA), administered by the Department of Housing and Urban Development (HUD), mandates real estate developers engaged in selling or leasing lots across state lines to adhere to specific registration and disclosure requirements. By requiring developers to register subdivisions of 100 or more non-exempt lots, ILSA aims to protect consumers from fraudulent marketing practices and help prospective property buyers make informed decisions.

Examples

Example 1: Rollins, a subdivider with a 200-acre subdivision in Florida, aims to market lots nationally. Under ILSA, Rollins must register with the Office of Interstate Land Sales Registration (OILSR), a division of HUD, and provide a Property Report detailing important disclosures about the land.
Example 2: A real estate developer in Texas plans to sell parcels of land across different states. The developer must comply with ILSA requirements by registering the subdivision and furnishing purchasers with a Property Report that highlights crucial details such as the land’s availability, services, and financial obligations.

Frequently Asked Questions (FAQs)

Q1: Who enforces the Interstate Land Sales Full Disclosure Act?

The ILSA is enforced by the Office of Interstate Land Sales Registration (OILSR), a division of HUD.

Q2: What is the purpose of the Interstate Land Sales Full Disclosure Act?

The main goal of ILSA is to prevent fraudulent marketing practices and protect consumers by ensuring developers provide all necessary disclosures and information before a sale transpires.

Q3: What is a Property Report?

It is a disclosure document that contains information about the subdivision, such as availability of utilities, infrastructure, financial obligations, environmental concerns, and any legal restrictions, which must be provided to prospective buyers.

Q4: Are there any exemptions to the ILSA?

Yes, developers selling subdivided lots that fall under specific exclusions, such as sales of fewer than 100 lots, may be exempt from registering under ILSA.

Q5: What happens if a developer fails to comply with ILSA?

Non-compliance with ILSA can result in severe penalties, including fines, cancellation of contracts, and refunds to buyers.

Office of Interstate Land Sales Registration (OILSR): A division of HUD responsible for the administration and enforcement of ILSA.
Property Report: A disclosure statement that developers must provide to potential buyers as part of ILSA, containing key information about the land and subdivision.
Subdivider: A real estate developer or entity that divides a tract of land into smaller parcels for sale or development.
Housing and Urban Development (HUD): The U.S. federal department that establishes policies and programs related to housing and urban development, including the enforcement of ILSA.

Online Resources

References

U.S. Department of Housing and Urban Development. “Interstate Land Sales Full Disclosure Act.” HUD.gov.
Federal Trade Commission. “Buying Vacant Land.” FTC.gov.

Suggested Books for Further Studies

“Real Estate Law” by Marianne M. Jennings
“Principles of Real Estate Practice” by Stephen Mettling and David Cusic

Real Estate Basics: Interstate Land Sales Full Disclosure Act Fundamentals Quiz

### What is the main purpose of the Interstate Land Sales Full Disclosure Act? - [ ] To mandate the installation of utilities in new subdivisions. - [ ] To regulate housing prices. - [ ] To protect consumers from fraudulent real estate practices. - [ ] To classify land according to federal standards. > **Explanation:** The primary purpose of ILSA is to protect consumers from fraudulent real estate practices by requiring full disclosure and registration of subdivisions with the HUD. ### Who is responsible for enforcing the Interstate Land Sales Full Disclosure Act? - [x] Office of Interstate Land Sales Registration (OILSR) - [ ] Federal Bureau of Investigation (FBI) - [ ] The Environmental Protection Agency (EPA) - [ ] Local municipalities > **Explanation:** The enforcement of ILSA falls under the purview of the OILSR, which is a division of HUD. ### What must a developer provide to potential buyers to comply with ILSA? - [ ] A financial forecast - [ ] A site visit - [x] A Property Report - [ ] A letter of recommendation > **Explanation:** To comply with ILSA, a developer must provide a Property Report that contains essential disclosures about the land and the subdivision. ### Under ILSA, which entity requires developers to register subdivisions? - [ ] Local county offices - [x] U.S. Department of Housing and Urban Development (HUD) - [ ] State tax offices - [ ] Federal Bureau of Investigation (FBI) > **Explanation:** Developers are required to register subdivisions with HUD as part of the ILSA. ### What kind of subdivisions does ILSA primarily target? - [ ] Subdivisions located within a single state - [x] Subdivisions of 100 or more non-exempt lots across state lines - [ ] Subdivisions smaller than 50 lots - [ ] Subdivisions exclusively for commercial use > **Explanation:** ILSA primarily targets subdivisions of 100 or more non-exempt lots that are sold or leased across state lines. ### Which document details the availability of utilities, infrastructure, and financial obligations of the land being sold? - [ ] Sales Agreement - [ ] Survey Report - [x] Property Report - [ ] Deed > **Explanation:** The Property Report, required under ILSA, contains information about the availability of utilities, infrastructure, and financial obligations of the land being sold. ### What types of lots may be exempt from registering under ILSA? - [x] Sales of fewer than 100 lots - [ ] Only multi-family housing units - [ ] Agricultural land - [ ] Commercial properties only > **Explanation:** Subdivisions with sales of fewer than 100 lots may be exempt from the registration requirements of ILSA. ### What penalties may a developer face for not complying with ILSA? - [ ] Suspension of local licenses - [ ] Business audit by the IRS - [ ] Notification of local media - [x] Fines, contract cancellation, and refunds to buyers > **Explanation:** Non-compliance with ILSA can result in severe penalties, including fines, contract cancellation, and refunds to buyers. ### Which division of HUD handles the administration of ILSA? - [ ] Federal Housing Administration (FHA) - [x] Office of Interstate Land Sales Registration (OILSR) - [ ] Office of Fair Housing and Equal Opportunity (FHEO) - [ ] Office of Residential Care Facilities (ORCF) > **Explanation:** The Office of Interstate Land Sales Registration (OILSR) is responsible for administering ILSA. ### What information does the Property Report not usually include? - [ ] Infrastructure details - [ ] Legal restrictions - [ ] Availability of services - [x] Aesthetic characteristics of the landscape > **Explanation:** The Property Report typically includes details on infrastructure, legal restrictions, and availability of services, but not aesthetic characteristics of the landscape.