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ILSA Claims Significantly Limited Against Realtors

Jan 12, 2010 - News by

WLSC not only recently won a huge appeal in the Eleventh Circuit, but was also a part of a landmark decision which will now help to limit ILSA actions against real estate agents.

The Interstate Land Sales Full Disclosure Act is a Federal consumer protection statute which requires that, prior to the purchase of property, a buyer must be informed of facts which would enable a reasonable person to make an informed decision about purchasing the property.  Failure to comply with the notice requirements under the Act results in strict liability for a developer and/or agents of the developer.

The buyers filed an ILSA action against a real estate agent for the developer’s failure to comply with ILSA’s notice requirements even though the agent was not a party to the contract between the buyers and the developer and had acted solely in his capacity as a realtor.  The trial court entered summary judgment in favor of the realtor, finding that, based on traditional agency principles, the real estate agent, who had no personal involvement in the ILSA violations, could not be held liable.

The buyers appealed this decision to the Eleventh Circuit.  Without hearing oral argument, the Eleventh Circuit issued a per curiam opinion affirming the trial court’s decision.  Finding that ILSA “distinguishes between agents who effect a sale, as opposed to those involved in the transaction in other ways,” the Court held that the realtor simply acted in his role as salesperson, did not actually sell the property, and did not act in a misleading or fraudulent manner in his role as salesperson.

The Eleventh Circuit’s decision has a significant limiting effect on ILSA claims against realtors.  The decision now prevents remorseful buyers from bringing suit against real estate agents who have no control over a developer’s contract with a buyer and cannot ensure compliance with ILSA.  The Eleventh Circuit did the right thing by limiting the scope of ILSA defendants and making it more difficult to bring ILSA claims against real estate agents who are simply doing their job.  WLSC is proud to have had a part in such a significant development in ILSA case law.

John P. Joy (Ft. Lauderdale) and Sara M. Sandler (Ft. Lauderdale) successfully defended the case on appeal.

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