Failure to comply with disclosure provisions of the Federal Truth-in-Lending Act constitutes grounds for relief and damages. In the Arizona case of Eby v. Reb Realty, Inc., 9th Circuit U.S. Court of Appeals (1974), the court held that where realty sales on its own account were significant aspects of broker's business and it extended credit to buyers in nearly half its sales, broker was a "creditor," subject to the disclosure requirements in the Truth- in-Lending Act.

The plaintiff brought an action in two counts under the Act. Seeking (1) rescission of a secured real estate credit transaction and (2) twice the amount of the finance charge paid by her in the same transaction. The suit was based upon the admitted failure of the defendant to make certain disclosure of credit terms and rescission rights required by the Act.

The opinion of the appellate court states, in part:

"In October of 1969 Eby purchased a home from appellant for $16,700. The contract of sale provided that $600 would be paid as a down payment, that Eby would assume an existing Veterans' Administration mortgage for $11,900, and that a second mortgage would be executed in Reb Realty's favor for the balance of $4,200 payable in installments with 8% simple interest. Eby paid a total of $1,252 under the agreement; the down payment of $600, closing costs of $51, and $601

Under the first mortgage, $239.41 of which represented interest. Nothing was paid towards the second mortgage. When this default occurred, Reb Realty instituted forcible detainer proceedings, successfully reentering possession in March, 1970. Eby then brought the present action.

In general, the Truth in Lending Act requires a "creditor" to disclose credit terms - for example, the annual interest rate - to a borrowing consumer. See 15 U.S.C. § 1638. Failure to make the requisite disclosures can subject the creditor to civil liability in an amount equal to double the finance charge paid in connection with the transaction, but in no event less than $100 or more than $1,000. 15 U.S.C. § 1640(a) (1). Additional duties are imposed on a creditor - and different borrower rights come into play - when a security interest is retained or acquired, as part of a credit transaction, in any real property "which is used or expected to be used as the residence" of the borrower. 15 U.S.C. § 1635(a). The debtor is given a right of rescission which must normally be exercised within three days of the consummation of the transaction. The lender must provide the borrower with written notice of this limited right to rescind in addition to making all the other usual disclosures required with any extension of credit. When the creditor fails to disclose any item of the requisite information, the right to rescind is not limited by the normal three day period but continues until all the disclosures are made. 15 U.S.C. §1635(a).

Under the civil liability section, section 1640, the district court awarded Eby $478.82, twice the amount of interest she paid. In granting rescission of the sale agreement and the two mortgages under the second count, the court ordered the return of the $1,252 paid by Eby under the agreement, an amount which included the principal and interest paid under the first mortgage. By stipulation this was reduced by the rental value of the premises during appellee's possession, a sum of $830, resulting in a net rescission award of $422.

The Act does not impose its disclosure duties on, nor accord a right of rescission against, every person extending credit, but applies only to those "who regularly extend or arrange for the extension of, credit . . . whether in connection with loans, sales of property or services, or otherwise." 15 U.S.C. § 1602 (f). Appellant raises two issues concerning the application of this definition to it: (1) that it was improper to decide its creditor status on summary judgment since that was a disputed issue of fact, see F.J.Civ..Q.R. 56(c). and (2) that in any event it is not a creditor within the statutory definition.

As for as the record revealed at summary judgment, appellant is primarily a real estate broker acting as an intermediary between purchasers and sellers. However, between the date of its incorporation in February, 1969 and the pendency of this case below in September, 1970 - a time span of nineteen months - Reb Realty sold seven parcels of property for its own account. In three instances, including the sale to appellee, credit was extended by Reb Realty. The credit sales were made in April, 1969, October, 1969, and August 1970.

Summary judgment is, of course, appropriate only when there are no disputed issues of "fact," and only "legal" issues remain to be decided. And while the question of what is low or fact is one that has continually bedeviled courts, in this case it is neither analytically nor practically difficult to determine in which category the finding of creditor lies. The number of realty sales made by Reb Realty, the number that were on credit, etc., are facts. The application of the term "creditor" to those basic facts, a process requiring the court to look to statutory purpose and legislative intent, is a function of a court as low-finder, and, hence, a legal conclusion appropriate for summary decision. (Citing cases).

Nonetheless, even when the question is denominated one of low, it will not always be proper to enter summary judgment. In certain cases summary judgment may be inappropriate because the legal issue is so complex, difficult, or insufficiently highlighted that further factual elucidation is essential for its prudently considered resolution. This is not such a case. Appellant suggests only that a trial might bring out what percentage of its profits were derived from credit transactions and the circumstances in which it acquired the properties it sold, whether by chance or design. We fail to see how knowledge of these facts would materially assist a court in applying the term "creditor."

The issue is then Presented whether, on the facts of record, Reb Realty 11 regularly extended credit" and was thus a creditor within the Act. The question is one of first impression upon which there is little guidance. The statutory definition only focuses inquiry on the word "regularly.

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(To Be Concluded)