200 East Partners decision sheds light on what constitutes evasion under the ILSFDA


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200 East Partners, LLC v. Gold, 2009 Fla. App. LEXIS 3598 (Jan. 23, 2009) 

 

The plaintiffs bought one of the first 99 units in a 115-unit condominium and later tried to rescind the sale, arguing the developer had violated ILSFDA. The developer claimed the first 99 units qualified for the 100-Lot Exemption, and the remaining 16 units qualified for the Improved Lot Exemption. At the time of the plaintiffs’ purchase, the sales contracts for the final sixteen units did not require construction of the entire building and plaintiffs argued this deficiency caused the entire development to violate ILSFDA.

 

The court agreed, holding that “exemption eligibility for the subdivision as it relates to a prospective purchase is determined at the time the sale is made.” The court also pointed to additional case law stating that a developer could not rely on the 100-Lot Exemption and then wait until a sale in excess of 99 units to qualify for the Improved Lot Exemption, nor could it rely on the 100-Lot Exemption and then use the Improved Lot Exemption merely to evade the registration requirements of ILSFDA. Also, the court noted that ILSFDA is a consumer protection statute and should be liberally construed in favor of the public. Additionally, the court explicitly stated that the ILSFDA is a strict liability statute. Note: The court appears to have “interpreted” guidelines that make no distinction with respect to the timing of qualification for these exemptions.

 

This article does not constitute legal advice or the formation of an attorney-client relationship, and is not for re-publication without express permission of the Carmel & Carmel P.C.

 

The citation for the 200 East Partners decision is:

200 East Partners, LLC v. Gold, 2009 Fla. App. LEXIS 3598 (Jan. 23, 2009)

Please contact Aaron Eidelman at aeidelman@carmel.us if you have any comments or questions in regards to this article.

2009-02-15 07:30:00