## Facts

- Eddie Cruz contracted to purchase a condominium unit from Leviev Fulton Club, LLC (LFC) on June 22, 2007, and paid a deposit.
- Cruz alleged LFC failed to provide the printed property report and other disclosures required by the Interstate Land Sales Full Disclosure Act (ILSA).
- When closing occurred, Cruz did not tender performance; LFC retained the deposit.
- Cruz sued seeking rescission and return of his deposit under ILSA, plus a second non-ILSA cause of action related to the transaction.
- LFC moved for summary judgment, arguing the sale was exempt from ILSA because the contract obligated completion of the building within two years.
- The purchase agreement described an anticipated or expected completion timeline, qualified by “unavoidable delays,” and included buyer rescission language tied to construction not beginning within two years.

## Issues

1. Whether the contract “obligate[d] the seller to erect” the building within two years under 15 U.S.C. § 1702(a)(2), exempting the transaction from ILSA’s disclosure requirements.
2. Whether Cruz’s second cause of action stated a legally sufficient basis for relief.

## Decision

- The court denied LFC’s motion for summary judgment on the ILSA claim, holding the contract did not clearly and unconditionally bind LFC to complete construction within two years (or, at minimum, presented ambiguities that precluded summary judgment).
- The court granted summary judgment dismissing the second cause of action for failure to state a basis for relief.

## Legal Principles

- The § 1702(a)(2) exemption applies only when the contract creates a clear, legally enforceable obligation for the seller to complete construction within two years.
- Contract language expressing expectations, estimates, or anticipated completion—especially when broadly conditioned on delays—does not necessarily establish the required two-year obligation.
- Provisions giving the buyer an option to rescind due to delays are not the same as a contractual duty requiring the seller to complete within two years.
- ILSA exemptions are construed narrowly, and the developer bears the burden of proving an exemption applies, particularly on summary judgment.

## Conclusion

The court allowed Cruz’s ILSA rescission theory to proceed because LFC failed to show its contract unambiguously imposed a two-year completion obligation necessary for the statutory exemption, while dismissing Cruz’s separate non-ILSA claim as legally insufficient.


Cruz v. Leviev Fulton Club, LLC, 711 F. Supp. 2d 329 (S.D.N.Y. 2010)