The Department of Housing and Urban Development, Office of Interstate Land Sales Registration, Washington, D. C., has requested that the following letter be brought to the attention of North Carolina real estate brokers:
The purpose of this letter is to alert you to consequences which may ensue from your failure to understand fully the Interstate Land Sales Full Disclosure Act and its implementing regulations. The 1968 Interstate Land Sales Full Disclosure Act become effective April 28, 1969, and has now been operative for nearly four years. Although the Office of Interstate Land Soles Registration (OILSR) has processed thousands of registrations on both domestic and foreign subdivisions, it is nevertheless likely that an even larger number of subdivisions covered by this Act are still unregistered. Unless exempt, any developer having 50 or more lots or parcels of subdivided land who sells these lots by using the U. S. mails or any other instruments of interstate commerce, without first registering with OILSR and providing the purchaser in advance of sale with an approved property report, is in violation of the law and may be sentenced to a jail term of 5 years of a $5,000 fine, or both. In addition, all such contracts are voidable at the absolute and unconditional election of the purchaser. Besides refunding the purchase price of the lot, the developer may be required to pay the reasonable costs of all improvements on the lot or lots. Once an unregistered developer is faced with the wholesale repurchasing of properties previously sold, many of which have already been improved, his bankruptcy is more than a remote possibility. All developers should be forewarned to reassess their positions on the need for registration before it is too late. Since the Act defines a "developer" as "any person who, directly or indirectly, sells or leases, or offers to sell or lease, or advertises for sale or lease any lots in a subdivision," real estate brokers who are active in promoting the sale of lots in any unregistered subdivision, could be regarded as sharing the owner's responsibilities for complying with the Act. In addition to the direct penalties that the developer may face, there may be serious derivative consequences for the attorneys, accountants, bankers and title companies of unregistered developers under certain circumstances. We urge you to read and study the Interstate Land Sales Full Disclosure Act and the OILSR Regulations. We are ready at all times to answer any questions from concerned parties.
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