## Facts

- Purchasers agreed to buy a luxury condominium unit in New York City from a developer under a contract governed by the Interstate Land Sales Full Disclosure Act (ILSA), 15 U.S.C. §§ 1701–1720.
- The contract required a 20% deposit, later restructured through an amendment; purchasers paid about $510,000, approximately 15% of the purchase price.
- The contract included a liquidated-damages provision consistent with ILSA’s remedial framework, allowing the seller to retain 15% of the purchase price or actual damages upon purchaser default.
- Purchasers later sought to revoke the contract and recover their deposit under ILSA.
- The purchase agreement was not acknowledged in a manner that would allow the agreement itself to be recorded under New York real property recording requirements.
- Purchasers claimed the contract violated ILSA § 1703(d)(1), arguing that because the agreement was not recordable, the contract did not contain a “description of the lot” “in a form acceptable for recording.”

## Issues

1. Whether ILSA § 1703(d)(1)’s requirement that the lot description be “in a form acceptable for recording” means the entire purchase agreement must be recordable.
2. Whether the condominium-unit description in the contract satisfied § 1703(d)(1) even though the contract, lacking proper acknowledgment, was not itself recordable under New York law.

## Decision

- The Second Circuit reversed the summary judgment entered for the purchasers.
- The court held § 1703(d)(1) requires that the description of the lot—not the entire contract—be in a form acceptable for recording.
- The court held the contract’s description of the condominium unit satisfied § 1703(d)(1).
- The case was remanded with instructions to enter judgment for the seller and the escrow agent.
- Purchasers’ separate appeal regarding attorneys’ fees was dismissed as moot.

## Legal Principles

- Under ILSA § 1703(d)(1), “in a form acceptable for recording” modifies the “description of the lot,” not the purchase agreement as a whole.
- A purchaser is not entitled to revoke under § 1703(d)(1) solely because the contract is not recordable under state law if the lot description itself is clearly identifiable and capable of being placed in recordable form.
- Statutory interpretation of § 1703(d)(1) turns on text and grammar; courts should not add a contract-recordability requirement absent clear statutory language.

## Conclusion

The Second Circuit held that ILSA’s recording-related requirement applies to the lot description within the contract, not to whether the entire purchase agreement can be recorded under state law, and it denied rescission where the condominium unit was adequately described.


Bacolitsas v. 86th & 3rd Owner, LLC, 702 F.3d 673 (2d Cir. 2012)