15 U.S.C. § 1703 — Requirements respecting sale or lease of lots
submitted 58 years ago by Pub. L. 90-448 to r/title-15-COMMERCE-AND-TRADE · 1,098 words · no verdicts yet
This section regulates interstate and mail-based sales or leases of nonexempt lots. It bans specified fraud and disclosure practices and gives buyers and lessees cancellation and repayment rights.
(a) Prohibited activities. A developer or agent may not directly or indirectly use interstate transportation or communication, or the mails, for a nonexempt lot: (1) to sell or lease it unless a statement of record is effective under section 1706, a compliant printed property report was given to the buyer or lessee before contract signing, the statement and report contain no material falsehood or required omission, and advertising is consistent with the report; or (2) to sell, lease, or offer the lot while using a device, scheme, or artifice to defraud; obtaining money or property through an untrue statement of a material fact or an omission of a material fact necessary to make the statements made, in light of the circumstances and the overall offer and sale or lease, not misleading, when the information concerns the lot or subdivision; engaging in a transaction or business practice that operates as fraud or deceit; or saying roads, sewers, water, gas, electricity, or recreation facilities will be provided or completed without saying so in the contract.
(b) Seven-day cancellation. A buyer or lessee may cancel a nonexempt lot contract until midnight of the seventh day after signing, or later if state law requires. The contract must clearly state this right.
(c) Missing report. If a required property report was not given before signing, the buyer or lessee may cancel within two years after signing, and the contract must clearly state this right.
(d) Additional cancellation right. A nonexempt lot contract may be canceled for two years after signing if it does not: (1) clearly identify the lot in a recordable description; (2) require written notice of default or breach and 20 days after receipt to fix it; and (3) require a refund when the buyer or lessee loses the lot after paying 15 percent of its price, excluding interest. The refund is the amount paid toward price minus the greater of 15 percent of the price or the seller’s damages. This subsection does not apply if the buyer receives within 180 days a warranty deed, or an equivalent local deed warranting that the grantor did not convey the lot to another and that the lot is free of encumbrances by the grantor or anyone claiming through the grantor.
(e) Repayment after cancellation. If a contract is canceled under (b), (c), or (d), the buyer or lessee tenders an instrument transferring the lot rights back, and the rights and lot are substantially in the condition in which they were conveyed or claimed to be conveyed, the buyer or lessee is entitled to all money paid under the contract.
It shall be unlawful for any developer or agent, directly or indirectly, to make use of any means or instruments of transportation or communication in interstate commerce, or of the mails—
with respect to the sale or lease of any lot not exempt under section 1702 of this title—
to sell or lease any lot unless a statement of record with respect to such lot is in effect in accordance with section 1706 of this title;
to sell or lease any lot unless a printed property report, meeting the requirements of section 1707 of this title, has been furnished to the purchaser or lessee in advance of the signing of any contract or agreement by such purchaser or lessee;
to sell or lease any lot where any part of the statement of record or the property report contained an untrue statement of a material fact or omitted to state a material fact required to be stated therein pursuant to sections 1704 through 1707 of this title or any regulations thereunder; or
to display or deliver to prospective purchasers or lessees advertising and promotional material which is inconsistent with information required to be disclosed in the property report; or
with respect to the sale or lease, or offer to sell or lease, any lot not exempt under section 1702(a) of this title—
to employ any device, scheme, or artifice to defraud;
to obtain money or property by means of any untrue statement of a material fact, or any omission to state a material fact necessary in order to make the statements made (in light of the circumstances in which they were made and within the context of the overall offer and sale or lease) not misleading, with respect to any information pertinent to the lot or subdivision;
to engage in any transaction, practice, or course of business which operates or would operate as a fraud or deceit upon a purchaser; or
to represent that roads, sewers, water, gas, or electric service, or recreational amenities will be provided or completed by the developer without stipulating in the contract of sale or lease that such services or amenities will be provided or completed.
Any contract or agreement for the sale or lease of a lot not exempt under section 1702 of this title may be revoked at the option of the purchaser or lessee until midnight of the seventh day following the signing of such contract or agreement or until such later time as may be required pursuant to applicable State laws, and such contract or agreement shall clearly provide this right.
In the case of any contract or agreement for the sale or lease of a lot for which a property report is required by this chapter and the property report has not been given to the purchaser or lessee in advance of his or her signing such contract or agreement, such contract or agreement may be revoked at the option of the purchaser or lessee within two years from the date of such signing, and such contract or agreement shall clearly provide this right.
Any contract or agreement which is for the sale or lease of a lot not exempt under section 1702 of this title and which does not provide—
a description of the lot which makes such lot clearly identifiable and which is in a form acceptable for recording by the appropriate public official responsible for maintaining land records in the jurisdiction in which the lot is located;
that, in the event of a default or breach of the contract or agreement by the purchaser or lessee, the seller or lessor (or successor thereof) will provide the purchaser or lessee with written notice of such default or breach and of the opportunity, which shall be given such purchaser or lessee, to remedy such default or breach within twenty days after the date of the receipt of such notice; and
that, if the purchaser or lessee loses rights and interest in the lot as a result of a default or breach of the contract or agreement which occurs after the purchaser or lessee has paid 15 per centum of the purchase price of the lot, excluding any interest owed under the contract or agreement, the seller or lessor (or successor thereof) shall refund to such purchaser or lessee any amount which remains after subtracting (A) 15 per centum of the purchase price of the lot, excluding any interest owed under the contract or agreement, or the amount of damages incurred by the seller or lessor (or successor thereof) as a result of such breach, whichever is greater, from (B) the amount paid by the purchaser or lessee with respect to the purchase price of the lot, excluding any interest paid under the contract or agreement,
may be revoked at the option of the purchaser or lessee for two years from the date of the signing of such contract or agreement. This subsection shall not apply to the sale of a lot for which, within one hundred and eighty days after the signing of the sales contract, the purchaser receives a warranty deed (or, where such deed is not commonly used in the jurisdiction where the lot is located, a deed or grant that warrants at least that the grantor has not conveyed the lot to another person and that the lot is free from encumbrances made by the grantor or any other person claiming by, through, or under him or her).
If a contract or agreement is revoked pursuant to subsection (b), (c), or (d), if the purchaser or lessee tenders to the seller or lessor (or successor thereof) an instrument conveying his or her rights and interests in the lot, and if the rights and interests and the lot are in a condition which is substantially similar to the condition in which they were conveyed or purported to be conveyed to the purchaser or lessee, such purchaser or lessee shall be entitled to all money paid by him or her under such contract or agreement.
Source credit: (Pub. L. 90–448, title XIV, § 1404, Aug. 1, 1968, 82 Stat. 591; Pub. L. 93–383, title VIII, § 812(c)(1), Aug. 22, 1974, 88 Stat. 737; Pub. L. 96–153, title IV, § 403, Dec. 21, 1979, 93 Stat. 1127.)
- 1968Enacted · Pub. L. 90-448 · 82 Stat. 591
- 1974Amended · Pub. L. 93-383 · 88 Stat. 737
- 1979Amended · Pub. L. 96-153 · 93 Stat. 1127
A history note hasn’t been published yet. The record shows enactment by Pub. L. 90-448 on 1968-08-01.
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