777 F.

2d 1444
54 USLW 2338

Bruce E. WINTER, Michael Arbetter and Gary Stein, general

partners of and doing business as Americor Realty
Associates, Plaintiffs-Appellants,
v.
HOLLINGSWORTH PROPERTIES, INC., et al., DefendantsAppellees.
No. 84-5476.

United States Court of Appeals,

Eleventh Circuit.
Dec. 11, 1985.

Payton & Rachlin, P.A., Richard S. Rachlin, Andrew J. Markus, Miami,

Fla., for plaintiffs-appellants.
Alan H. Fein, Miami, Fla., for amicus Appalachia, Inc., Appalachian Joint
Venture & Carrie Mountain, Inc.
Bruce Forrest, U.S. Dept. of Justice, Civ. Div., Washington, D.C., for
amicus Dept. of Housing & Urban Development.
Crary, Buchanan, Bowdish & Bovie, John Cordes, Stuart, Fla., for
defendants-appellees.
Kirk, Pinkerton, Savary, Carr & Strode, P.A., Johnson S. Savary, Sarasota,
Fla., for amicus Ackerman, et al. on behalf of APT.
Appeal from the United States District Court for the Southern District of
Florida.
Before TJOFLAT and HENDERSON, Circuit Judges, and NICHOLS * ,
Senior Circuit Judge.
TJOFLAT, Circuit Judge:

This suit was brought by the buyer of a condominium unit seeking rescission of
its contract to purchase the unit and the return of its deposit pursuant to the
Interstate Land Sales Full Disclosure Act (ILSFDA), 15 U.S.C. Secs. 17011720 (1982). The district court granted the seller's motion for final summary
judgment, concluding that the ILSFDA is not applicable to the sale of
condominiums or, if the Act does apply, this particular sale was exempt
because the buyer was in the land sales business. We reverse.

I.
2

On July 8, 1981, Americor Realty Associates, a Florida general partnership,

and Bruce E. Winter, Michael Arbetter, and Gary Stein, the general partners of
Americor (buyer), entered into a contract to purchase a condominium unit from
Hollingsworth Partnership (seller), a Florida general partnership. Construction
of the condominim had not been completed at the time the contract was
executed, and the contract did not obligate the seller to complete the building at
any definite time. The seller did not provide the buyer with a printed property
report before the contract was executed as required by the Interstate Land Sales
Full Disclosure Act. 15 U.S.C. Sec. 1703(a)(1)(B) (1982).1

The buyer paid ten percent of the total purchase price to the seller as a deposit
at the time the contract was made. It was required to pay an additional deposit
of five percent when the condominium building was "topped out" and the
balance of the purchase price at closing. The buyer did not pay the additional
five percent as required and failed to cure the default after being given notice
and an opportunity to cure. On October 25, 1982, the seller notified the buyer
that its deposit was forfeited.

On April 25, 1983, the buyer sought to exercise its right to revoke the contract
and obtain the return of its deposit pursuant to the ILSFDA.2 The seller denied
the applicability of the ILSFDA to the agreement in question and refused the
request for revocation. The buyer filed a complaint in the district court on May
13, 1983, seeking revocation of the contract, costs, and attorneys' fees.3 The
seller's answer admitted that it had not complied with the ILSFDA, but denied
that the statute was applicable to this transaction.

On August 25, 1983, the buyer moved the court for summary judgment on the
issue of liability. The court denied this motion on October 17. On October 20,
the seller moved the court for summary judgment. The court heard argument
from counsel on January 27, 1984, and granted the motion on May 18, 587
F.Supp. 1289. Final summary judgment for the seller was entered on May 24.
The court held that the ILSFDA is not applicable to the sale of a condominium

unit because a condominium is not a "lot" within the meaning of the Act.4
Alternatively, the court stated that, if the ILSFDA did cover the sale of
condominiums, the transaction in question would still be exempt from the Act
because the buyer was engaged in the business of land sales.5 The buyer now
appeals, claiming that the district court erred in its determinations that the
ILSFDA did not apply to condominium sales and that the buyer was in the land
sales business.
II.
6

To determine whether the ILSFDA applies to the sale of a condominium 6 we

must construe two provisions of the Act. Section 1703(a) makes it unlawful to
sell or lease "any lot not exempt under section 1702" unless the seller complies
with the provisions of the Act, including the property report requirement. See
supra note 1. Section 1702(a)(2) provides that the Act shall not apply to "the
sale or lease of any improved land on which there is a residential, commercial,
condominium, or industrial building, or the sale or lease of land under a
contract obligating the seller or lessor to erect such a building thereon within a
period of two years."

A.
7

The ILSFDA was originally enacted as part of the Housing and Urban
Development Act of 1968. The bulk of this Act was directed toward making
available suitable housing for low income level families through a series of
interest subsidies, insurance provisions, loans, grants, and urban renewal
provisions. In contrast, the ILSFDA is an antifraud statute utilizing disclosure
as its primary tool, much like the securities laws. It is not disputed that
Congress, in passing the statute, desired to protect purchasers from
unscrupulous sales of undeveloped home sites, frequently involving out-of-state
sales of land purportedly suitable for development but actually under water or
useful only for grazing. The seller, and the district court, therefore conclude
that Congress was only concerned with, and the ILSFDA only applies to, the
sale of raw land. We do not agree that the scope of the statute is so limited.

Congress did not draft the statute to apply solely to raw land, but made it
applicable to the sale or lease of lots. The legislative history of the Act indicates
that Congress was concerned with the sale of fairly large numbers of
undeveloped lots pursuant to a common promotional plan. Conf.Rep. No. 1785,
90th Cong., 2d Sess. (1968), reprinted in 1968 U.S.Code Cong. & Ad.News
3053, 3066. The legislative history also employs the terms "land" and "real
estate." Id. Although Congress may have been primarily concerned with the

sale of raw land, it struck a balance by making the statute applicable to all lots
and providing an exemption, not for all improved land, but for improved land
on which a residential, commercial, condominium, or industrial building exists
or where the contract of sale obligates the seller to erect such a structure within
two years.7
9

The key term that we must construe is "lot" because the sale or lease of any
nonexempt lot triggers the provisions of the Act. Lot is not defined anywhere in
the ILSFDA. 8 The Secretary of Housing and Urban Development (HUD) has
defined lot, as part of a rule making proceeding completed in 1973, as "any
portion, piece, division, unit, or undivided interest in land ... if the interest
includes the right to the exclusive use of a specific portion of the land." 24
C.F.R. Sec. 1710.1 (1985). During the course of this rule making proceeding,
builders expressed concern over the inclusion of condominiums within the
scope of the ILSFDA. The Secretary responded to this concern in detail:

10

The application of the Act to condominiums has been consistent OILSR9 policy
since the issue was first raised in 1969. The bases for this position are that
condominiums carry the indicia of and in fact are real estate, whether or not the
units therein have been constructed. A condominium is accordingly viewed by
OILSR as equivalent to a subdivision, each unit being a lot. Adverse comment,
particularly from builders, asserts that condominiums are equivalent to houses
and the sale of houses was not intended to be covered by the Act. However, the
right to condominium space is a form of ownership, not a structural description.
This condominium concept is employed as an ownership form for completely
horizontal developments and even for campgrounds. Congress recognized the
need to exempt professional builders from the Act and provided an appropriate
exemption (15 U.S.C. 1702[(a)(2)]). For a condominium unit sale to be
exempted from the Act, it must accordingly qualify for exemption; i.e., either it
must be completed before it is sold, or it must be sold under a contract
obligating the seller to erect the unit within two years from the date the
purchaser signs the contract of sale.

11

38 Fed.Reg. 23,866 (1973). HUD reiterated its position that the ILSFDA
applies to the sale of condominiums in 1974, see 39 Fed.Reg. 7824 (1974), and
in 1979, see 44 Fed.Reg. 24,012 (1979).

12

The courts afford great deference to the interpretation of a federal statute by the
agency charged with administration of the statutory scheme. EPA v. National
Crushed Stone Ass'n, 449 U.S. 64, 83, 101 S.Ct. 295, 307, 66 L.Ed.2d 268
(1980). The agency's interpretation need not be the only reasonable one or even
the one that we would reach had we decided the question initially; if the

agency's interpretation is reasonable, it will be upheld. American Paper Institute

v. American Electric Power Service Corp., 461 U.S. 402, 422-23, 103 S.Ct.
1921, 1933, 76 L.Ed.2d 22 (1983). We find that HUD's inclusion of
condominiums within the ILSFDA is a reasonable interpretation of Congress'
original intent in enacting the statute and the only defensible interpretation
given subsequent events.10
13

The ILSFDA was intended to curb abuses accompanying interstate land sales.
The Act accomplishes that goal by including within it all sales of lots and then
exempting a number of transactions, including sales of fully improved property.
It is reasonable to conclude, as HUD did, that the term "lot" was used to refer
generally to interests in realty. The legislative history supports this construction,
employing the terms "lot," "land," and "real estate" in discussing the Act. This
construction is also reasonable in terms of the purpose of the statute. A
fraudulent out-of-state sale of land is not rendered any less fraudulent if the
condominium form of ownership is utilized.11

14

As previously described, it is clear that HUD has considered condominium

sales within the scope of the ILSFDA since its formal pronouncement in 1973,
in which it maintained that this construction had been followed since 1969. In
1978, Congress was considering amendments to the ILSFDA. At the time, the
Act exempted sales of improved land on which there is a residential,
commercial, or industrial building or where the seller is obligated to complete
such a structure within two years. Congress amended this provision explicitly to
exempt condominium sales under the same circumstances, see supra note 7,
noting that the HUD regulations did not provide such an exemption. See S.Rep.
No. 871, 95th Cong., 2d Sess. (1978), reprinted in 1978 U.S.Code Cong. &
Ad.News 4773, 4868. Congress was informed by a HUD representative that the
amendment would have no effect on the agency's interpretation of the statute.

15

The obvious conclusion to be drawn from this history is that Congress was
aware of HUD's interpretation that the Act covered condominium sales and
acted to exempt such sales where the building is existing or must, by contract,
be completed within two years. If the ILSFDA did not include the sale of
condominiums within its scope, it would be senseless to provide for the
exclusion of such sales under certain prescribed conditions. We therefore
conclude that Congress was aware of, and approved of, 12 HUD's construction
of the Act13 and hold that the ILSFDA is applicable to the sale of
condominiums.

B.

16

The seller contends that, if condominium sales do come within the ILSFDA,
the district court's grant of summary judgment in its favor can still be upheld
because the sale in question was exempt as "the sale ... of any improved land on
which there is a ... condominium ... building." 15 U.S.C. Sec. 1702(a)(2)
(1982). The seller argues that there can be no "sale" until title to the unit is
transferred. Because the buyer was not obligated to accept title until the unit
was completed, the seller maintains that, at the time of the sale, the transaction
would involve improved land on which there is a condominium.

17

We are unable to agree with the seller's contentions. For the purposes of the
ILSFDA the "sale" takes place at the time the purchaser signs the contract and
incurs an obligation. See Law v. Royal Palm Beach Colony, Inc., 578 F.2d 98,
100 (5th Cir.1978);14 Aldrich v. McCulloch Properties, Inc., 627 F.2d 1036,
1043-44 (10th Cir.1980); see also 24 C.F.R. Sec. 1710.1 (1985). This is a
necessary result to ensure that the Act's purpose is fulfilled; the buyer must
receive the information necessary to make his decision prior to the purchase
commitment. See Law v. Royal Palm Beach Colony, 578 F.2d at 99. Real estate
contracts frequently call for a long period of installment payments with title not
being transferred until the entire amount is paid. It would frustrate the intent of
the Act to say that no sale takes place until title is transferred.

18

The language of the statute also focuses on the time the purchaser signs the
contract. The property report must be delivered in advance of this time, 15
U.S.C. Sec. 1703(a)(1)(B) (1982), an initial period of revocation is granted the
purchaser following this event, 15 U.S.C. Sec. 1703(b) (1982), and the time to
revoke a contract for failure to deliver a property report runs from that time. 15
U.S.C. Sec. 1703(c) (1982). In addition, the exemption in question applies to
improved land on which there is a building or where a contract requires the
seller to construct such a building within two years, again focusing on the time
of contracting.15

19

We decline to depart from the plain language of the statutory exemption. If at

the time the purchaser signs the contract there exists a condominium building or
the seller is obligated to erect such a building within two years, the sale is
exempt from the Act. If, as in this case, no building exists at the time of
contracting and the contract does not contain a binding obligation to complete
one within two years, compliance with the statute is required.

III.
20

The district court determined that, if the ILSFDA applies to the sale of a

condominium, this particular transaction was exempt because the buyer was
engaged in a bona fide land sales business. See supra note 5. The seller never
raised this issue before the district court and has not argued the point on appeal
as a ground to affirm the district court's grant of summary judgment. The
district court's conclusion appears to have been largely premised on the name of
the buyer's general partnership, Americor Realty Associates. No other facts
appear in the district court's order to support the conclusion that the buyer was
in the land sales business. Our review of the record discloses no additional facts
that could support such a finding. Accordingly, the court erred in determining
that there was no genuine issue as to whether the buyer was in the land sales
business,16 clearly a material fact in this case, and that the seller was entitled to
judgment as a matter of law. See Poller v. Columbia Broadcasting System, 368
U.S. 464, 467, 82 S.Ct. 486, 488, 7 L.Ed.2d 458 (1962); Fed.R.Civ.P. 56(c).
IV.
21

For the foregoing reasons, the district court's order granting the seller's motion
for summary judgment is REVERSED and the case is REMANDED for
proceedings consistent with this opinion.

22

REVERSED and REMANDED.

Honorable Philip Nichols, Jr., U.S. Circuit Judge for the Federal Circuit, sitting
by designation

15 U.S.C. Sec. 1703(a)(1)(B) (1982) provides that:

(a) It shall be unlawful for any developer or agent, directly or indirectly, to
make use of any means or instruments of transportation or communication in
interstate commerce, or of the mails-(1) with respect to the sale or lease of any lot not exempt under section 1702 of
this title-....
(B) to sell or lease any lot unless a printed property report, meeting the
requirements of section 1707 of this title, has been furnished to the purchaser or
lessee in advance of the signing of any contract or agreement by such purchaser
or lessee.
The seller admitted that it used the mails and instruments of transportation or

communication in interstate commerce in connection with the sale of the

condominium in question.
2

15 U.S.C. Sec. 1703(c) (1982) provides that:

In the case of any contract or agreement for the sale or lease of a lot for which a
property report is required by this chapter and the property report has not been
given to the purchaser or lessee in advance of his or her signing such contract or
agreement, such contract or agreement may be revoked at the option of the
purchaser or lessee within two years from the date of such signing, and such
contract or agreement shall clearly provide this right.
The purchaser, upon complying with certain conditions, is entitled to the return
of all money paid to the seller when the contract is revoked pursuant to section
1703(c). 15 U.S.C. Sec. 1703(e) (1982).

15 U.S.C. Sec. 1709 (1982) specifies that a purchaser may bring an action at
law or in equity to enforce the provisions of section 1703 and includes costs and
reasonable attorneys' fees in the amount recoverable. "The district courts of the
United States ... have jurisdiction of offenses and violations" under the
ILSFDA. 15 U.S.C. Sec. 1719 (1982)

The provisions of 15 U.S.C. Sec. 1703(a)(1) (1982) apply to the "sale or lease
of any lot not exempt under section 1702." (emphasis added). The Act further
provides that it is unlawful to "sell or lease any lot unless a printed property
report" has been furnished to the purchaser. 15 U.S.C. Sec. 1703(a)(1)(B)
(1982) (emphasis added)

The district court referred to the regulations promulgated pursuant to the

ILSFDA which provide an exemption for transactions involving the "sale of
lots to a person who is engaged in a bona fide land sales business." 24 C.F.R.
Sec. 1710.14(a)(3) (1985). The Secretary of Housing and Urban Development
is granted the authority to exempt from the ILSFDA, by regulation, certain
sales if he finds that the enforcement of the Act "is not necessary in the public
interest ... by reason of the small amount involved or the limited character of
the public offering." 15 U.S.C. Sec. 1702(c) (1982). The statute contains a
similar provision, exempting from the Act "the sale or lease of lots to any
person who acquires such lots for the purpose of engaging in the business of
constructing residential, commercial, or industrial buildings or for the purpose
of resale or lease of such lots to persons engaged in such business." 15 U.S.C.
Sec. 1702(a)(7) (1982); see also 24 C.F.R. Sec. 1710.5(g) (1985)

The term "condominium" refers to a form of real estate ownership, rather than
to any particular type of building. See 38 Fed.Reg. 23, 866 (1973). For

example, the condominium form of ownership has been used frequently in the
sale and development of private campgrounds, involving little more than raw
land. See id
7

As originally enacted, the exemption covered improved land on which there is

a residential, commercial, or industrial building or where the seller is obligated
to construct such a building within two years. A 1978 amendment inserted the
word condominium after commercial. See Housing and Community
Development Amendments of 1978, Pub.L. No. 95-557, Sec. 907(a)(1), 92
Stat. 2080, 2127. The importance of this amendment is discussed infra

The Act contains exemptions for the sale of lots in a subdivision of limited size.
E.g., 15 U.S.C. Sec. 1702(a)(1) (1982) (sale of lots in subdivision containing
less than 25 lots); 15 U.S.C. Sec. 1702(b)(1) (1982) (sale of lots in subdivision
containing less than 100 lots); see also 15 U.S.C. Sec. 1702(b)(2) (1982) (sale
of lots in subdivision where not more than 12 lots sold in a year). The term
subdivision is defined in the Act as "any land which ... is divided or is proposed
to be divided into lots, whether contiguous or not, for the purpose of sale or
lease as part of a common promotional plan." 15 U.S.C. Sec. 1701(3) (1982). It
is necessary to construe the term "lots" before any meaning can be given to the
definition of a subdivision

The Office of Interstate Land Sales Registration (OILSR) is the organization

designated by the Secretary of HUD to administer the Act. See 15 U.S.C. Sec.
1715(a) (1982)

10

Other courts that have considered this issue have agreed that HUD's
interpretation is a reasonable one. E.g., Schatz v. Jockey Club Phase III, Ltd.,
604 F.Supp. 537, 540-41 (S.D.Fla.1985); Nargiz v. Henlopen Developers, 380
A.2d 1361, 1364 (Del.1977); Appalachian, Inc. v. Olson, 468 So.2d 266, 268
(Fla.Dist.Ct.App.1985). In Eaton v. Dorchester Development, Inc., 692 F.2d
727 (11th Cir.1982), we reversed the district court's dismissal of a complaint
for lack of subject matter jurisdiction. The complaint alleged a violation of, and
based jurisdiction on, the ILSFDA. The defendant argued that because its
development contained only 86 condominium units, the sale in question was
exempt from the ILSFDA pursuant to 15 U.S.C. Sec. 1702(b)(1) (1982) (sale of
lots in subdivision containing less than one hundred lots are exempt). The
plaintiffs responded that the development encompassed a larger subdivision
being marketed pursuant to a common promotional plan and moved to amend
their complaint to state explicitly the factual basis for jurisdiction. Before the
plaintiffs could conduct discovery to attempt to show that a larger subdivision
was involved, the district court dismissed the suit for lack of subject matter
jurisdiction. We held that dismissal was premature and that the plaintiffs had to

be given an opportunity to establish facts sufficient to support jurisdiction. It

was assumed, without discussion, that the Act would apply to condominium
sales, if the one hundred lot exemption was not available
11

See supra note 6

12

Courts ordinarily do not attach much significance to Congress' acquiescence in

an agency's interpretation of a statute because "[n]on-action by Congress is not
often a useful guide." Bob Jones University v. United States, 461 U.S. 574,
600, 103 S.Ct. 2017, 2033, 76 L.Ed.2d 157 (1983); see Aaron v. SEC, 446 U.S.
680, 694 n. 11, 100 S.Ct. 1945, 1954 n. 11, 64 L.Ed.2d 611 (1980). With regard
to the ILSFDA, however, Congress did more than acquiesce in HUD's
longstanding interpretation; Congress took specific action in 1978 to exempt
the sale of some condominiums from the Act's scope. See supra note 7. The
implication to be drawn from this action is that, absent such an exemption, the
ILSFDA must apply to the sale of condominiums

13

The seller argues the significance of two pieces of legislative history

subsequent to 1978: (1) a 1979 House Report indicating that legislation with
regard to condominium development and conversions was not needed because
of adequate state and local safeguards; and (2) a 1980 Senate Report
recommending legislation with regard to conversions of rental housing into
condominiums but advising that additional legislation covering new
condominiums was unnecessary, again because of adequate state and local
protections. The seller contends that, because this history declined to
recommend a comprehensive federal disclosure and protection scheme for all
condominium sales and noted the adequacy of state and local regulation, it
provides evidence that Congress did not believe the ILSFDA was applicable to
condominium sales. We are not persuaded for several reasons. First, this
legislative history is not connected to the ILSFDA, but instead is primarily
aimed at the problem of rental housing conversions. Second, the history
discusses the sale of existing condominiums as well as the development of new
ones. Most of these transactions would be exempt from the ILSFDA, and the
discussion of adequate state and local safeguards was therefore appropriate.
Finally, the scope of the ILSFDA's coverage of condominiums is very narrow,
applying only when sales exceed specified numbers of lots, see supra note 8,
not applying to sales that are solely intrastate, see 15 U.S.C. Sec. 1702(b)(7)
(1982), and exempting sales to persons in the land sales or construction
businesses, see supra note 5. Congress' refusal to enact a more wide-ranging
federal condominium statute does not mean that it intended to cast doubt on
HUD's interpretation of the ILSFDA

14

In Bonner v. City of Prichard, 661 F.2d 1206, 1209 (11th Cir.1981) (en banc),

this court adopted as binding precedent all decisions of the former Fifth Circuit
handed down prior to October 1, 1981
15

The provisions of the ILSFDA frequently apply to the sale or lease of a lot.
E.g., 15 U.S.C. Sec. 1703(a)(1)(B) (1982). Passage of title is irrelevant as far as
a lease is concerned, again evidencing that the time of contracting is the
important factor

16

HUD guidelines elaborate on the exemption at issue:

Lots Sold to Developers--The sale or lease of lots to a person who is engaged in
a bona fide land sales business is exempt. For a transaction to qualify for this
exemption, the purchaser must be a person who plans to subsequently sell or
lease the lot(s) in the normal course of business. The term 'business' refers to an
activity of some continuity, regularity and permanency or means of livelihood.
The sale or lease of lots to an individual who is buying the property for
investment (to be sold at some unforeseeable time in the future) would not be
exempt under this provision.

44

Fed.Reg. 24,018 (1979). Genuine issues exist as to the buyer's plans for the
condominium, its investment intent, and whether it was involved in a land sales
"business," meaning a continuous, regular, permanent endeavor or a means of
livelihood. The record does not contain any evidence upon which to base a
finding on these matters