LEGAL NEWS
April 2016
A Maze for Developers: Understanding the Interstate Land Sales Full Disclosure Act

The Interstate Land Sales Full Disclosure Act was enacted in 1968 to protect purchasers from buying inaccessible and undevelopable property from a developer who claimed the property would be a valuable investment. In the intervening years, this act has evolved into a consumer-protection statute with a variety of applications, and the act's details are often misunderstood.

The act covers developers of land, or other individuals offering 25 or more lots for sale, who use any means of interstate commerce, including the U.S. mail, to market the lots.

The federal Consumer Financial Protection Bureau collects and maintains files with information on property covered by the act, including names, addresses and social security numbers contained in property reports; state of title to the land; physical characteristics of the land, and planned availability of roads, services and utilities. Most of the information is public record, with the notable exception of social security numbers.

When a property is covered by the act, the purchaser has additional rights to cancel the contract with the developer. The developer must provide lengthy disclosures or comply with exemptions from the act for all lots or units. If the developer has not fully complied with the act, the purchaser may cancel the contract within two years of the contract signature date.
 
While strict compliance is required for developers, it's not easy to achieve due to the many sources and case law interpretations. For a purchaser, the act provides a way to get out of a property purchase before or after closing, and the developer must try to navigate all the legal ramifications.
 
It may appear that a project is exempt from the act at first, only to discover it is actually under its governance. This confusion can occur due to the broad definitions of terms such as "developer," "subdivision" and "common promotional plan."

An amendment introduced in mid-2013 clarified how the act applied to condominiums. Approved by the Senate and signed into law by President Obama, the amendment exempts new construction condominiums from the act's registration requirements after its effective  date of early 2015.
 
As the act may impact a project's financing, marketing and purchase contracts, it's a best practice to consult with an attorney as early as possible in the proceedings. At Aronoff, Rosen & Hunt, our Real Estate Law Team is among the best in the nation and can provide your project with the guidance to stay within these complex rules.
In This Issue
Managing Your Estate to Ensure Your Business or Family Remains Secure

Planning your estate is a critical task to ensure that your wishes and bequests are known and fulfilled. However, many people avoid the unpleasant nature of a will, even when it has implications for a family business or major property holdings.
 
But a will is not just an item to check off the to-do list. If your will is more than five years old, you need to check in on it and consider revisions. It's essential to keep it updated regularly. Review your will and make any necessary revisions after significant life changes such as:
  • Marriage
  • Divorce
  • Birth of a child or a grandchild
  • Child becoming a legal adult
  • Career change
  • Death of a beneficiary or executor
  • Major purchases or inheritances
In general, you should review your will at least every three to five years. We keep our clients' estate planning documents on file, but you should also make sure your family knows where to find it. If you keep a copy at home, a waterproof, fireproof safe in your house or a joint bank safe deposit box are good locations.

According to an AARP survey, two out of five Americans over the age of 45 do not even have a will. If you can be counted among them, stop putting it off. A will is critical to saving your family time, money and hassle. In the case of business and property owners, a will can be critical to ensuring the future of your ventures.
 
While you are making these types of decisions, we also recommended that you document other essential estate-planning considerations, such as financial and health-care powers of attorney.
 
If it's time to update your estate plan, contact Aronoff, Rosen & Hunt to address any concerns you might have, today.
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How to Protect Your Community Association's Attorney-Client Privilege

The attorney-client relationship protects communications between a lawyer and his or her client from being disclosed. The privilege allows a client and an attorney acting as a legal adviser to speak honestly about the facts surrounding a client's issue. Privilege is significant in defending lawsuits because it protects clients from disclosing any potentially damaging information.
 
But exactly who is the client in a case involving a homeowners' association or other community property association?
 
It's vital to know who's protected because only the client who has the privilege can waive it. Unintentionally, a board member for an association could pass along information about a lawsuit to an owner and as a result, that information is no longer protected.
 
There are two additional circumstances where an association board could face difficulties with attorney-privilege:
  1. Disclosure of confidential information to a former board member; and
  2. Communications with a property manager.
Once a board member resigns, do not update that person on any details regarding ongoing litigation under any circumstances. After relaying any attorney conversations or advice, that information is no longer protected. The former board member then can be made to testify.

The presence of a non-client can waive the privilege. When vendors or government officials are speaking with the Board, in the presence of the association's counsel, both the Board and counsel must recognize that remarks in the presence of that third party are not privileged.

Property managers may play an integral role as associations consider legal matters, and the board may want to include the manager in communications with the attorney. However, there are two federal cases in which courts have held that attorney-client privilege was waived by including the property manager because appropriate steps were not taken to maintain the privilege.

To ensure confidentiality, the association's management agreement should specifically define whether the property manager can be included in privileged communications and participate in the legal matters of the association.

If you would like to verify your management agreement or learn more about the privilege, please contact your Aronoff, Rosen & Hunt attorney for assistance.