The opinion of the court was delivered by: Hall, Circuit Judge:
Bacolitsas v. 86th and 3rd Owner, LLC
Before: SACK, HALL, LOHIER, Circuit Judges.
Sellers appeal from a judgment of the United States District Court for the Southern District of New York (Castel, J.), granting summary judgment to Purchasers on their claim for revocation of an executed purchase agreement for a luxury condominium unit in New York City, on the grounds that the agreement failed to comport with the Interstate Land Sales Full Disclosure Act, 15 U.S.C. §§ 1701-20. We conclude that the agreement is consistent with the requirements of the Act and therefore REVERSE the judgment of the district court and REMAND with instructions that judgment be entered for Sellers. We DISMISS as moot Purchasers' related appeal challenging denial of attorneys' fees, Docket No. 10-5230-cv.
This appeal provides us with an opportunity to clarify the requirements of the Interstate Land Sales Full Disclosure Act ("ILSA"), 15 U.S.C. §§ 1701-20, a statute that, while enacted more than forty years ago, has received little attention from the federal courts until recently. In basic terms, ILSA protects individual buyers or lessees who purchase or lease lots in large, uncompleted housing developments, including condominiums, by mandating that developers make certain disclosures. If a developer fails to provide these disclosures, ILSA permits buyers or lessees, under certain circumstances, to revoke their purchase or lease agreements within a designated period from the date of signing. 15 U.S.C. § 1703(d). As one of our sister circuits observed recently, it is this feature of ILSA that has made the statute "an increasingly popular means of channeling buyer's remorse into a legal defense to a breach of contract claim." Stein v. Paradigm Mirasol, LLC, 586 F.3d 849, 852 (11th Cir. 2009).
In the present case, Plaintiffs-Counter-Defendants-Appellees Vasilis Bacolitsas and Sofia Nikolaidou ("Plaintiffs") sought to avail themselves of § 1703(d)'s terms by bringing suit for revocation of a purchase agreement they executed with Defendant-Counter-Claimant-Appellant 86th & 3rd Owner, LLC and Defendant-Appellant Michael, Levitt & Rubinstein, LLC ("Defendants") for a luxury condominium unit in New York City, asserting that the agreement failed to comport with ILSA's disclosure requirements. Plaintiffs alleged, inter alia, that the purchase agreement was revocable because it did not contain "a description of the lot which makes such lot clearly identifiable and which is in a form acceptable for recording." 15 U.S.C. § 1703(d)(1). The district court granted summary judgment to Plaintiffs, concluding that because their purchase agreement was not recordable under state law, it did not comply with § 1703(d)(1) and was therefore subject to revocation. Addressing a question of first impression in this Court, we disagree and hold that § 1703(d)(1) requires the description and not the agreement itself be "in a form acceptable for recording" and that the description at issue in this case satisfies ILSA's requirements. We therefore REVERSE the district court's judgment and REMAND with instructions that the district court enter judgment for Defendants.*fn2
The facts are undisputed. The Brompton Condominium ("Brompton") is a luxury condominium building located at 86th Street and Third Avenue in Manhattan, New York.
Defendant 86th & 3rd Owner, LLC (the "Sponsor") sells, offers, and advertises units in the Brompton, and Defendant-Appellant Michael, Levitt & Rubinstein, LLC (the "Escrow Agent") is the Sponsor's escrow agent for all purchases of units in the building. Consistent with its obligations under ILSA, see 15 U.S.C. §§ 1704-05; 24 C.F.R. §§ 1710.100, 1710.105-18, the Sponsor previously filed with the United States Department of Housing and Urban Development ("HUD") a statement of record containing the property report, and, as required by statute, the property report provided all potential purchasers of units, including Plaintiffs, with certain information and warnings about the Brompton.*fn3 In addition, the Sponsor previously filed the condominium offering plan (the "Plan") with the Office of the New York State Attorney General pursuant to New York General Business Law §§ 352-e - 352-eeee. Attached to the Plan were drafts of a unit deed and the Sponsor's declaration of Condominium ("Draft Declaration").*fn4 The Plan contained a detailed description of each unit in the Brompton, identifying the dimensions and locations of all rooms and windows, the floor plan, the location of the unit within the building, and the direction the unit faced. The Draft Declaration included a metes and bounds description of the Brompton and indicated, inter alia, the specific tax lots on which the building was to be erected.
At some time prior to May 2008, Plaintiffs received from the Sponsor the property report and the Plan for the Brompton. In May 2008, Plaintiffs entered into an agreement (the "Agreement") with Defendants to purchase Unit 20A in the Brompton for $3.4 million. At the time Plaintiffs executed the Agreement, the Brompton was under construction; the building was not finished until January 2009. The Agreement incorporated by reference the Plan as well as the Draft Declaration. Under the Agreement's terms, Plaintiffs were to pay $340,000 upon signing, another $340,000 by November 2008 or on the date of closing, whichever was earlier, and the balance of the price at closing. The Agreement indicated that these two $340,000 sums constituted the deposit. In the event of Plaintiffs' default, Section 12(b) of the Agreement stated that the Sponsor could cancel the Agreement and, "as its sole remedy, shall have the right, subject to the provision of Section 12(d) below, to retain, as and for liquidated damages, the Deposit and any interest earned on the Deposit." Section 12(d) of the Agreement provided:
Notwithstanding the foregoing, if and only to the extent that the sale of the Residential Units is not exempt from the provisions of [ILSA], the amount of the Deposit to be retained by Sponsor upon Purchaser's failure to cure a default . . . will be the greater of (i) fifteen (15%) percent of the Purchase Price (excluding any ...