Tencza v. TAG Court Square

Real Property

New York Law Journal


Judge Paul Engelmayer

TAG sponsored a condominium having 237 residential units. The Tenczas sought to revoke their $2.99 million unit's (Unit 800) purchase on the ground that TAG violated the Interstate Land Sales Full Disclosure Act (ILSA) by not filing a statement of record with the Secretary of the Housing and Urban Development, and by failing to provide them a statutorily required property report. The court granted the Tenczas judgment as to TAG's liability, holding that under the Second Circuit's May 6 ruling in Berlin v. Renaissance Rental Partners, ILSA applies to the sale of condominium units, and that Unit 800 was not exempt as an "improved lot." For ILSA purposes the contract to buy Unit 800 was the parties' May 2007 purchase agreement, not their April 28, 2008 "Punch List Agreement." At the time of the contract for sale, Unit 800 was not complete and ready for occupancy. Thus its sale did not qualify for ILSA's Improved-Lot Exemption. Further, the Tenczas' right to revocation under ILSA was not extinguished by the purchase agreement's merger into the deed. The Tenczas' claims were not based on the terms of their contract with TAG. Rather, as federal statutory rights based on ILSA, their claims exist regardless of the terms of the contract.

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