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Interstate Land Sales Full Disclosure Act | Real Estate Exam Prep - YouTube
Channel: The Real Estate Classroom
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[Music]
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hey everyone my name is paul pacheski
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and welcome to the real estate classroom
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youtube channel before we get started do
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me a favor give this video a thumbs up
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hit that red subscribe button click on
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the notification bell and do me a favor
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if you have comments or questions put
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them down below
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all right the interstate land sales full
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disclosure
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act it is a federal law federal
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regulation that you have to know for
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your real estate licensing exam
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and uh a lot of students have said over
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the past year or so that uh
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they've had several questions numerous
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questions over this particular law so i
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wanted to uh
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do make sure you had a video out there
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to study so all right all right so the
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purpose of this particular regulation is
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to prevent people from purchasing
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unimproved land key here unimproved land
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being sold what's called site unseen
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and it's being represented by the
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developer as a golden
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opportunity for you and there's a little
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backstory of this you have to know
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there was a time in our history
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particularly in the 60s
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70s where these developers of swampland
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in florida or louisiana would run ads
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in states like north dakota minnesota in
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the months of december
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january and february and they would run
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these ads on tv and radio saying we got
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a great opportunity for you to buy
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prime real estate at a reduced value
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it's an awesome opportunity so on and so
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forth
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um and then if the person would inquire
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about it they would say listen we only
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have a couple of left
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a couple lots left you better get on
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board now there's not going to be any
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left
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creating that panic selling next thing
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you know
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by the time the phone call's done you
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have purchased a half acre lot in
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swamp land in florida or in louisiana or
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something like that
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it's absolutely worthless and so the
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government decided to put a stop
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to this now on the other hand there are
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times when this is a legitimate claim
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so the government wanted to regulate
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this and that's why we have the law that
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we're discussing here today
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now there are several requirements that
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you as a real estate student
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need to know for your real estate
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licensing exam
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number one this only applies this law
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only applies to
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subdivisions that contain 24
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or more or i'm sorry 25 or more
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lots i got it highlighted on your screen
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there
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all right 25 or more lots
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now several states have also created
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their own
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version of this law and some of those
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laws are
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more strict all right you have to be
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aware of that depending on the state
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that you are
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taking the exam in so 25 or more lots is
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the threshold number two
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the subdivider must register with the
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this is a federal agency the
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interstate land sales agency and that
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is with the housing and urban
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development
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department or sometimes called hud hud
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all right remember the purpose is to
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protect consumers who purchase
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these unimproved lots that site unseen
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now real quickly i know you know this
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but just to cover this for those that
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never heard this before an unimproved
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lot
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is a lot that's just vacant there's no
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buildings or anything on it and number
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two
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sight unseen means they've never seen
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the property there was never a showing
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done those type of things all right
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sight unseen and then here's the other
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thing at the bottom
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subdividers can't offer tracks of the
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subdivision
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manipulate the tracks if you will
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in an attempt to avoid this law it has
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to be open
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uh and honest basically to have
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integrity in the process
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now there has to be a report that's
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generated by
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the subdivider very important this uh
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report has some things that you have to
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know number one
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it must provide zoning information
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number two it must provide or provide
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the type of
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title that the buyer will receive will
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it be
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fee simple absolute will it be fee
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simple divisi
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the feasible those type of things
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the number of homes in the subdivision
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that are currently
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occupied uh not sold but
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actually occupied meaning that
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somebody's built improvements on there
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they've built houses and now
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they're occupying it number what is that
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number four utility services that are
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available to that particular subdivision
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and the fees that are charged
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liens against the property including any
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monthly assessments
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annual assessments special assessments
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or anything like that
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distance to the nearest town or
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community the report
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must also provide the types of roads in
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the soil conditions like is it a gravel
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road
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is it a dirt road is it a paved road and
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then it must be
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available or they must uh disclose any
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of
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what's available as far as recreational
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facilities go for those that own lots
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remember
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the reason they're providing this report
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is this is for
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those lots that have been purchased or
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they're attempting to sell these like
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these lots sight unseen so that means
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that if if somebody's buying it site
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unseen then they're going to at least
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have some of the basic information
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that's included in this report before
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making their decision to purchase it
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now there is built-in what we call
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statute of limitations here
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and remedies for for not complying with
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the law
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number one the report must be given to
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the prospective purchaser
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at least three days before signing the
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purchase contract
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all right this report has to be given by
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the developer to the prospective buyer
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three days before signing
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the purchase contract all right so once
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the purchase contract has been signed
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the purchaser has seven days what we
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call a right of rescission
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or or a cooling off period so they've
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signed the contract they've given their
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earnest deposit
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now they have seven days
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basically until midnight the seventh day
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after signing the purchase contract to
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legally rescind the contract
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penalty free that cooling off period
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the second bullet point if the this is
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the
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punitive damage here if you will if the
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subdivider fails to provide
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that disclosure that report three days
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prior to signing the contract
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if the purchaser did not receive a
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property report prior to signing the
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purchase contract
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the purchaser has two years to bring
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legal action to
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actually revoke the contract so they
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could buy it
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and they have up to two years to rescind
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the contract if
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they were not giving given that property
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report
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if they were given the property report
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and they were given that
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report within uh you know at least three
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days prior to signing the contract then
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they have
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only the seven day right of rescission
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or cooling off period
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now there are some exceptions to the law
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that you have to be aware of number one
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the subdivision has to have more than
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25 la or 25 or more lots key 25 or more
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lots if there's 24
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or less or less than 25 lots
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then this law does not apply now
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understand there are some law
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some states that have created their own
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version of this law
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so obviously the you know the subdivider
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would have to comply with that state law
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you're going to have to know that for
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your state side of the licensing exam
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but this
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tracts of land that are 20 acres or more
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do not apply
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lots sold to developers because there's
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the appearance or the assumption that
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the developers have a higher
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understanding of what's going on
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so so they are exempt lots with existing
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buildings such as houses are exempt
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and then lots that require construction
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of a building within
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two years of closing you have to know
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that we're not going to get into the
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reasons why
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you don't need to know those reasons why
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but there are specific reasons why
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this would be the case so you don't have
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to know that you just have to know that
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lots that require construction of a
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building within a two-year period of
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closing
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are exempted all right so this is
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important before you go
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very important remember states have
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their own
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version of this law so you have to know
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what we discussed here
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for your national side of your real
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estate exam
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your state may have stricter guidelines
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you're going to have to know that
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for your state side of the exam so make
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sure that you know them so you don't
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confuse the two
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uh should you have a question or two on
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your national side and then a question
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or two on your state
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side so keep that in mind all right if
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you're going to continue studying check
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out this video right here i highly
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suggest it if you're going to if you
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have not subscribed to the channel
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please do so click
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the little circle to the to my left and
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comments or questions we love comments
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or questions please put them down below
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i would appreciate that
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i'll see you in another video
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