Fraud in Sale of Condominium Units: ILSA as the Basis for Recovery

NYSBA N.Y. Real Property Law Journal, Vol.44, No. 3, p. 6-11, Summer 2016

St. John's Legal Studies Research Paper No. 16-0022

7 Pages Posted: 28 Oct 2016  

Vincent DiLorenzo

St. John's University - School of Law

Date Written: October 26, 2016

Abstract

Private parties bringing actions against real estate developers based on the fraudulent acts or practices of a developer often allege common law fraud, violation of N.Y. General Business Law §349 which prohibits deceptive acts or practices in the conduct of any business, contract claims based on express warranties, or claims based on statutory warranties. Each of these claims has limitations or requirements that may prevent a successful action. What is often ignored is a possible action based on ILSA’s antifraud provisions. This article explores the availability of a private action under ILSA based on allegations of fraud and the required elements of such a cause of action.

ILSA can serve as an effective means by which a condominium unit purchaser can maintain an action against a developer based on allegations of fraud. In contrast to some state statutory prohibitions against fraud, ILSA expressly authorizes private actions. In contrast to state common law actions, ILSA’s prohibitions extend to both misrepresentations and omissions. In addition, its prohibitions encompass a broad range of fraudulent activity beyond disclosure obligations. Finally, to maintain an action, proof of scienter is not required, and in the view of most courts neither is reliance.

Keywords: Fraud, Condominiums, Interstate Land Sales Act

Suggested Citation

DiLorenzo, Vincent, Fraud in Sale of Condominium Units: ILSA as the Basis for Recovery (October 26, 2016). NYSBA N.Y. Real Property Law Journal, Vol.44, No. 3, p. 6-11, Summer 2016; St. John's Legal Studies Research Paper No. 16-0022. Available at SSRN: https://ssrn.com/abstract=2859620

Vincent DiLorenzo (Contact Author)

St. John's University - School of Law ( email )

8000 Utopia Parkway
Jamaica, NY 11439
United States

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