10-4229-cv (L)
Bacolitsas v. 86th and 3rd Owner, LLC


                           UNITED STATES COURT OF APPEALS
                                 FOR THE SECOND CIRCUIT
                                 _____________________

                                            August Term, 2011

     (Argued: November 2, 2011                                      Decided: December 19, 2012)

                               Docket Nos. 10-4229-cv(L); 10-5230-cv(CON)
                                        _____________________

                                  VASILIS BACOLITSAS, SOFIA NIKOLAIDOU,

                                                          Plaintiffs-Counter-Defendants-Appellees,

                                                   -v.-

                                         86TH & 3RD OWNER, LLC,

                                                          Defendant-Counter-Claimant-Appellant,

                         MICHAEL, LEVITT & RUBINSTEIN, LLC, ESCROW AGENT,

                                                       Defendant-Appellant.
                                        _______________________

         Before:
                            SACK, HALL, LOHIER, Circuit Judges.
                                      _______________________

         Sellers appeal from a judgment of the United States District Court for the Southern

District of New York (Castel, J.), granting summary judgment to Purchasers on their claim for

revocation of an executed purchase agreement for a luxury condominium unit in New York City,

on the grounds that the agreement failed to comport with the Interstate Land Sales Full

Disclosure Act, 15 U.S.C. §§ 1701-20. We conclude that the agreement is consistent with the

requirements of the Act and therefore REVERSE the judgment of the district court and



                                                    1
          
REMAND with instructions that judgment be entered for Sellers. We DISMISS as moot

Purchasers’ related appeal challenging denial of attorneys’ fees, Docket No. 10-5230-cv.

                                    REVERSED AND REMANDED.
                                                _______________________

                     JEFFREY R. METZ (Adam Leitman Bailey, John M. Desiderio, William J. Geller,
                     Courtney J. Killelea, on the brief), Adam Leitman Bailey, P.C., New York, New
                     York, for Plaintiffs-Counter-Defendants-Appellees.

                     MARK WALFISH (Adrienne B. Koch and Thomas M. Lopez, on the brief), Katsky
                     Korins LLP, New York, New York, for Defendant-Counter-Claimant-Appellant
                     86th & 3rd Owner, LLC and Defendant-Appellant Michael, Levitt & Rubinstein,
                     LLC.

                     LI YU, Assistant United States Attorney (Sarah S. Normand, Assistant United
                     States Attorney, on the brief), for Preet Bharara, United States Attorney for the
                     Southern District of New York, New York, New York, for Amicus Curiae The
                     United States of America.1

                     Robert D. Kaplan, Friedman Kaplan Seiler & Adelman LLP, New York, New
                     York, for Amicus Curiae The Real Estate Board of New York.
                                           _______________________

       HALL, Circuit Judge:

       This appeal provides us with an opportunity to clarify the requirements of the Interstate

Land Sales Full Disclosure Act (“ILSA”), 15 U.S.C. §§ 1701-20, a statute that, while enacted

more than forty years ago, has received little attention from the federal courts until recently. In

basic terms, ILSA protects individual buyers or lessees who purchase or lease lots in large,

uncompleted housing developments, including condominiums, by mandating that developers

                                                                   
1
 When this appeal was originally briefed, the United States filed an appearance as amicus curie
on behalf of the United States Department of Housing and Urban Development (“HUD”).
Following passage of the Dodd-Frank Wall Street Reform and Consumer Protection Act, Pub. L.
No. 11-203 (2010) (codified in part at 12 U.S.C. §§ 5481-5603), however, the rulemaking and
other authority historically vested in HUD under the Interstate Land Sales Full Disclosure Act
was transferred to the newly created Consumer Financial Protection Bureau (“CFPB”). See 12
U.S.C. § 5581 (transferring “[a]ll consumer protection functions” under the Interstate Land Sales
Full Disclosure Act to the CFPB). The government has notified us that the CFPB has adopted all
of HUD’s arguments.
                                                                      2
        
make certain disclosures. If a developer fails to provide these disclosures, ILSA permits buyers

or lessees, under certain circumstances, to revoke their purchase or lease agreements within a

designated period from the date of signing. 15 U.S.C. § 1703(d). As one of our sister circuits

observed recently, it is this feature of ILSA that has made the statute “an increasingly popular

means of channeling buyer’s remorse into a legal defense to a breach of contract claim.” Stein v.

Paradigm Mirasol, LLC, 586 F.3d 849, 852 (11th Cir. 2009).

       In the present case, Plaintiffs-Counter-Defendants-Appellees Vasilis Bacolitsas and Sofia

Nikolaidou (“Plaintiffs”) sought to avail themselves of § 1703(d)’s terms by bringing suit for

revocation of a purchase agreement they executed with Defendant-Counter-Claimant-Appellant

86th & 3rd Owner, LLC and Defendant-Appellant Michael, Levitt & Rubinstein, LLC

(“Defendants”) for a luxury condominium unit in New York City, asserting that the agreement

failed to comport with ILSA’s disclosure requirements. Plaintiffs alleged, inter alia, that the

purchase agreement was revocable because it did not contain “a description of the lot which

makes such lot clearly identifiable and which is in a form acceptable for recording.” 15 U.S.C. §

1703(d)(1). The district court granted summary judgment to Plaintiffs, concluding that because

their purchase agreement was not recordable under state law, it did not comply with § 1703(d)(1)

and was therefore subject to revocation. Addressing a question of first impression in this Court,

we disagree and hold that § 1703(d)(1) requires the description and not the agreement itself be

“in a form acceptable for recording” and that the description at issue in this case satisfies ILSA’s

requirements. We therefore REVERSE the district court’s judgment and REMAND with

instructions that the district court enter judgment for Defendants.2


                                                                   
2
  Plaintiffs-Counter-Defendants-Appellees Vasilis Bacolitsas and Sofia Nikolaidou have filed a
separate appeal from a post-judgment order of the district court denying their motion for
attorneys’ fees. We consolidated that appeal with the present case for purposes of decision, and
                                                                      3
        
                                                                     BACKGROUND

       The facts are undisputed. The Brompton Condominium (“Brompton”) is a luxury

condominium building located at 86th Street and Third Avenue in Manhattan, New York.

Defendant 86th & 3rd Owner, LLC (the “Sponsor”) sells, offers, and advertises units in the

Brompton, and Defendant-Appellant Michael, Levitt & Rubinstein, LLC (the “Escrow Agent”) is

the Sponsor’s escrow agent for all purchases of units in the building. Consistent with its

obligations under ILSA, see 15 U.S.C. §§ 1704-05; 24 C.F.R. §§ 1710.100, 1710.105-18, the

Sponsor previously filed with the United States Department of Housing and Urban Development

(“HUD”) a statement of record containing the property report, and, as required by statute, the

property report provided all potential purchasers of units, including Plaintiffs, with certain

information and warnings about the Brompton.3 In addition, the Sponsor previously filed the

condominium offering plan (the “Plan”) with the Office of the New York State Attorney General

pursuant to New York General Business Law §§ 352-e – 352-eeee. Attached to the Plan were

drafts of a unit deed and the Sponsor’s declaration of Condominium (“Draft Declaration”).4 The


                                                                                                                                                                                                      
                                                                                                                                                                                                      
based on our reversal of the district court’s judgment in the lead appeal, we DENY Plaintiffs’
related appeal, Docket No. 10-5230-cv, as moot.
3
  Under ILSA, a sponsor must file with HUD a statement of record, containing a property report,
prior to selling or leasing any units in a proposed condominium development. See 15 U.S.C. §§
1703(a)(1)(A), 1706. The property report must then be furnished to any purchaser or lessee prior
to the execution of any contract for the sale or lease of a unit, and if the sponsor fails to follow
this procedure, the purchaser or lessee may revoke the contract within two years from the date of
signing. See id., § 1703(a)(1)(B); 24 C.F.R. § 1710.105(c). It is undisputed here that the
Sponsor correctly filed a statement of record with HUD, Joint Appendix (“J.A.”) 323-24, 368-69,
and provided Plaintiffs with a copy of the property report, J.A. 319, 362.
4
  Under New York law, a parcel of real property becomes a condominium by filing a declaration
pursuant to New York Real Property Law § 339-n. See Schoninger v. Yardarm Beach
Homeowners Ass’n, Inc., 523 N.Y.S.2d 523, 526-27 (2d Dep’t 1987). In the ordinary course, a
declaration is not filed until construction of the condominium is complete because it is only at
that point that new tax numbers can be assigned to the property. See N.Y. Real Prop. L. § 339-p.
                                                                                      4
        
Plan contained a detailed description of each unit in the Brompton, identifying the dimensions

and locations of all rooms and windows, the floor plan, the location of the unit within the

building, and the direction the unit faced. The Draft Declaration included a metes and bounds

description of the Brompton and indicated, inter alia, the specific tax lots on which the building

was to be erected.

       At some time prior to May 2008, Plaintiffs received from the Sponsor the property report

and the Plan for the Brompton. In May 2008, Plaintiffs entered into an agreement (the

“Agreement”) with Defendants to purchase Unit 20A in the Brompton for $3.4 million. At the

time Plaintiffs executed the Agreement, the Brompton was under construction; the building was

not finished until January 2009. The Agreement incorporated by reference the Plan as well as

the Draft Declaration. Under the Agreement’s terms, Plaintiffs were to pay $340,000 upon

signing, another $340,000 by November 2008 or on the date of closing, whichever was earlier,

and the balance of the price at closing. The Agreement indicated that these two $340,000 sums

constituted the deposit. In the event of Plaintiffs’ default, Section 12(b) of the Agreement stated

that the Sponsor could cancel the Agreement and, “as its sole remedy, shall have the right,

subject to the provision of Section 12(d) below, to retain, as and for liquidated damages, the

Deposit and any interest earned on the Deposit.” Section 12(d) of the Agreement provided:

                     Notwithstanding the foregoing, if and only to the extent that the
                     sale of the Residential Units is not exempt from the provisions of
                     [ILSA], the amount of the Deposit to be retained by Sponsor upon
                     Purchaser’s failure to cure a default . . . will be the greater of (i)
                     fifteen (15%) percent of the Purchase Price (excluding any interest
                     owed) or (ii) the amount of damages incurred by Sponsor due to
                     the default . . . .

Section 31 specifically prohibited Plaintiffs from recording the Agreement.

                                                                                                                                                                                                      
                                                                                                                                                                                                      
Consistent with this procedure, the Sponsor filed its declaration in February 2009 after
construction of the Brompton was finished.
                                                                                      5
        
       In December 2008, the parties amended the Agreement to permit the second $340,000

deposit to be paid in two separate installments of $170,000. Plaintiffs paid the first installment

but failed to pay the second. In aggregate, therefore, Plaintiffs paid $510,000 as a deposit, or

15% of the purchase price. In March 2009, the Sponsor notified Plaintiffs by letter that it was

exercising its right to cancel the Agreement and to retain the $510,000 deposit, which the

Sponsor demanded be released by the Escrow Agent. Plaintiffs objected and challenged the

Sponsor’s cancellation with the Office of the New York Attorney General. See N.Y. Comp.

Codes R. & Regs. tit. 13, § 20.3(o)(3)(viii)(a). In January 2010, the Attorney General issued a

decision finding that Plaintiffs had defaulted on the Agreement and that the Sponsor was entitled

to the release of Plaintiffs’ $510,000 deposit. That same month, the Escrow Agent released the

deposit to the Sponsor. In July 2009, however—four months after the Sponsor had informed

Plaintiffs of its cancellation of the Agreement—Plaintiffs had notified the Sponsor that they were

revoking the Agreement pursuant to ILSA. Plaintiffs asserted that the Agreement (1) failed to

provide an adequate description of the property in violation of 15 U.S.C. § 1703(d)(1), and (2)

contained an invalid liquidated damages clause in violation of 15 U.S.C. § 1703(d)(3).

Defendants rejected Plaintiffs’ purported revocation.

       In August 2009, Plaintiffs brought the present action seeking both a declaration that they

had validly revoked the Agreement pursuant to 15 U.S.C. § 1703(d) and also an award of

$510,000 in money damages, the amount paid as a deposit. Following discovery both parties

moved for summary judgment. In October 2010, the district court entered judgment for

Plaintiffs, holding that they were entitled to revoke the Agreement. The court reached this

conclusion on grounds not explicitly advanced by the parties. Relying exclusively on the

language of § 1703(d), the court held that “[r]ead in context, the statute requires that the



                                                  6
        
description [of the lot] be included in a document that is in a form capable of being recorded,”

and because here, Plaintiffs’ Agreement for the purchase of Unit 20A in the Brompton was not

recordable under New York law, the court concluded that the Agreement was subject to

revocation under ILSA. Defendants appealed.

                                          DISCUSSION

       We review a grant of summary judgment de novo and will affirm “only where, construing

all the evidence in the light most favorable to the non-movant and drawing all reasonable

inferences in that party’s favor, there is no genuine [dispute] as to any material fact and the

movant is entitled to judgment as a matter of law.” McBride v. BIC Consumer Prods. Mfg. Co.,

583 F.3d 92, 96 (2d Cir. 2009) (internal quotation marks and alteration omitted); see Fed. R. Civ.

P. 56(a).

       Although Plaintiffs prevailed below, they do not expend considerable effort defending the

lower court’s interpretation of 15 U.S.C. § 1703(d), which, as already noted, did not rest on any

argument squarely advanced by Plaintiffs. Instead, Plaintiffs reiterate the same points they

raised below—namely, that the Agreement is revocable because it failed to provide an adequate

description of the property in violation of 15 U.S.C. § 1703(d)(1) and because it contained an

invalid liquidated damages clause in violation of 15 U.S.C. § 1703(d)(3). Defendants, by

comparison, object to both the district court’s and Plaintiffs’ construction of § 1703(d) and assert

that the Agreement satisfied fully the requirements of ILSA. The parties do agree that if we

reject the district court’s construction of § 1703(d), we should nonetheless reach the merits of

their other arguments. We turn first to the district court’s construction of § 1703(d), and then

address the parties’ competing interpretations of the statute.




                                                  7
        
       I.      The District Court’s Decision

       The district court’s holding rested solely on the language of § 1703(d), which provides:

               Any contract or agreement which is for the sale or lease of a lot . . .
               and which does not provide --

                       (1) a description of the lot which makes such lot clearly
                       identifiable and which is in a form acceptable for recording
                       by the appropriate public official responsible for
                       maintaining land records in the jurisdiction in which the lot
                       is located;

               may be revoked at the option of the purchaser or lessee for two
               years from the date of the signing of such contract or agreement.

15 U.S.C. § 1703(d)(1). The district court interpreted this language to require “that the

description [of the lot] be included in a document [i.e., the contact or agreement] that is in a form

capable of being recorded.” It reasoned that because “no provision of New York law . . . would

permit the recording of a stand-alone description of real property,” Congress must have intended

that the “form acceptable for recording” clause in § 1703(d) refers to the underlying contract or

agreement, not to the description of the lot itself. The court observed that under New York law,

however, for an executory contract for the sale of real property, like the Agreement, to be

recordable, it must, inter alia, be “acknowledged or proved.” See N.Y. Real Prop. L. § 294(1).

Because it is undisputed that the Agreement failed to satisfy this requirement, the court held that

the “Agreement, containing the description, was not in recordable form and [wa]s subject to

rescission under section 1703(d)(1) of ILSA.” The court noted as well that the anti-recordation

provision in Section 31 of the Agreement confirmed that the Agreement was not recordable.

       With great respect to the district court, we reject this interpretation. The phrase “which is

in a form acceptable for recording” in § 1703(d)(1) modifies the word “description” at the

beginning of that same sentence, not the more distant nouns “contract or agreement” located in



                                                  8
        
the prior section. See Barnhart v. Thomas, 540 U.S. 20, 26 (2003) (observing that under the

grammatical “rule of the last antecedent,” any limiting clause or phrase should be read as

modifying only the noun or phrase that it immediately follows); accord Allard K. Lowenstein

Int’l Human Rights Project v. Dep’t of Homeland Sec., 626 F.3d 678, 681 (2d Cir. 2010)

(holding that under “basic rules of grammar and punctuation,” the qualifying phrase in question

modified only the “immediately antecedent” clause and not the “more remote” clause). The

most natural reading of § 1703(d)(1), therefore, is that a “contract or agreement” may be

revocable within two years of the date of signing if that document does not include a description

of the lot in question which (1) “makes such lot clearly identifiable” and (2) “is in a form

acceptable for recording.” Whether the contract or agreement itself is “in a form acceptable for

recording” is immaterial.

       Additionally (and contrary to the district court’s reasoning), that a description of a lot

standing alone may not be recordable under New York law does not compel a different

construction of § 1703(d)(1). The district court read into the statute language that is not there.

Section § 1703(d)(1) does not require that the description of the lot be a recordable document,

only that it be “in a form acceptable for recording.” Congress could have mandated more

clearly that revocation of a purchase agreement under ILSA turns on the recordability of the lot

description—for example, by including language that the description “must be in a recordable

document”—but it chose not to. See Dodd v. United States, 545 U.S. 353, 357 (2005) (observing

that courts must presume that Congress “says in a statute what it means and means in a statute

what it says”) (quoting Conn. Nat’l Bank v. Germain, 503 U.S. 249, 253-54 (1992)); accord

Phong Thanh Nguyen v. Chertoff, 501 F.3d 107, 114 (2d Cir. 2007). Congress required instead

that the lot description be “in a form acceptable for recording,” a phrase to which we turn and



                                                  9
        
interpret in the next section. The district court’s interpretation fails to give effect to this plain

language.

        Finally, reading § 1703(d)(1) to require that the description of a lot—and not the

agreement or contract—be “in a form acceptable for recording” aligns with ILSA’s underlying

purpose. One of the core functions of ILSA is “to prevent false and deceptive practices in the

sale of . . . land by requiring developers to disclose information needed by potential buyers.”

Flint Ridge Dev. Co. v. Scenic Rivers Ass’n of Okla., 426 U.S. 776, 778 (1976); see Bodansky v.

Fifth on the Park Condo, LLC, 635 F.3d 75, 80 (2d Cir. 2011) (observing that ILSA was enacted

in response to an epidemic of unscrupulous marketing and sale of undeveloped subdivided land

and was designed to “require[] full disclosure to buyers of [such] land”); accord Long v.

Merrifield Town Ctr. L.P., 611 F.3d 240, 245 (4th Cir. 2010); Winter v. Hollingsworth Props.,

Inc., 777 F.2d 1444, 1446-47 (11th Cir. 1985). Construing § 1703(d)(1) to mandate that the

description of a lot in a contract or agreement be clear and specific enough to satisfy generally

the local recording statutes “in the jurisdiction in which the lot is located,” § 1703(d)(1), furthers

this goal because it guarantees that developers provide potential buyers with the information they

need to make an informed decision about their purchase. See Long, 611 F.3d at 245. By

comparison, interpreting the statute to require that the contract or agreement satisfy the technical

requirements for recordability in the applicable local jurisdiction does not further this purpose.

        For the foregoing reasons, we conclude that under 15 U.S.C. § 1703(d)(1), the

“description of the lot” in the underlying contract or agreement—and not that contract or

agreement itself—must be “in a form acceptable for recording” in the “jurisdiction in which the

lot is located.”




                                                   10
         
       II.     Whether the Agreement Satisfies ILSA

       Although we could, at this juncture, remand to the district court for further proceedings,

the parties urge us to rule on whether under 15 U.S.C. § 1703(d)(1) the description of Unit 20A

in the Agreement was “in a form acceptable for recording” and whether the Agreement’s

liquidated damages clause violates § 1703(d)(3)—issues that were left unresolved below. While

generally we decline considering arguments not addressed by the district court, see Singleton v.

Wulff, 428 U.S. 106, 120 (1976), this is a prudential rule we apply at our discretion, see Booking

v. Gen. Star Mgmt. Co., 254 F.3d 414, 418-19 (2d Cir. 2001) (“It follows therefore that we have

discretion to consider issues that were raised, briefed, and argued in the District Court, but that

were not reached there.”). In determining whether to consider such issues, we rely on a number

of factors, including the interests of judicial economy, see Petrosino v. Bell Atl., 385 F.3d 210,

224 (2d Cir. 2004), and whether the unaddressed issues present pure questions of law, see

Booking, 254 F.3d at 419. Both factors are satisfied here. Remanding the matter for further

consideration would be inefficient because the issues were fully briefed and argued in the district

court. In addition, these issues present clear questions of law concerning the proper statutory

interpretation of ILSA. We thus turn to the merits of the parties’ arguments.

               i.      Section 1703(d)(1)

       Plaintiffs advance a novel but ultimately unavailing argument for why the description of

Unit 20A in the Agreement failed to satisfy 15 U.S.C. § 1703(d)(1). Relying principally on

Congress’ use of the word “form” in the phrase, “in a form acceptable for recording,” Plaintiffs

contend that, to comply with § 1703(d)(1), the description of the lot must be set forth in a

specific document—a “form”—that is recordable in the relevant jurisdiction. They maintain

that, in New York, that “form” is the unit deed (which they identify as New York’s “unit



                                                 11
        
description clause”), and because New York’s Condominium Act mandates that a condominium

unit deed contain “the liber, page and date of recording of the declaration,” N.Y. Real Prop. L §

339-o, for a description of the lot to be “in a form acceptable for recording,” the description must

include this particular information. Because the draft unit deed attached to the Plan (and

incorporated by reference in the Agreement) did not contain this information, Plaintiffs assert

that the Agreement failed to comply with 15 U.S.C. § 1703(d)(1). Alternatively, Plaintiffs argue

that even if the description of the lot need not contain the information required for recording a

unit deed under state law, the description provided in the Agreement was insufficient because it

inaccurately described the Brompton and the unit that Plaintiffs agreed to purchase. Defendants

counter that Plaintiffs’ construction of § 1703(d)(1) contradicts the statutory language and the

applicable regulations and that their challenge to the accuracy of the description provided in the

Agreement is without merit.

       We find Plaintiffs’ arguments to be unpersuasive. They assume that, under § 1703(d)(1),

the description of the lot contained in the purchase contract or agreement must be identical to the

property specifications contained in the deed ultimately used to convey the unit. Indeed, they

posit—without reference to any supporting authority—that New York Real Property Law § 339-

o “sets forth [what] a valid condominium unit description [should] include[].” Pls.’ Br. at 34.

But nothing in § 1703(d)(1) suggests that Congress intended that the description of the lot

mandated under ILSA be coextensive with what is required for conveyance of an individual unit

in the relevant jurisdiction. As already discussed, the plain language of § 1703(d)(1) requires

only that the description of the lot be “in a form acceptable for recording”—it does not require

that the description be “in a form acceptable for recording” as the deed for the lot. ILSA’s

origins confirm that Congress was concerned with disclosure, not conveyance. By enacting



                                                 12
        
ILSA, Congress sought to curtail rampant misleading advertising and sale of undeveloped

subdivided land by creating a national standard to guarantee full disclosure for the benefit of

prospective buyers, not to harmonize local requirements for the conveyance of undeveloped lots.

Cf. SEC v. DiBella, 587 F.3d 553, 572 (2d Cir. 2009).

       Even if the plain language of § 1703(d)(1) did not demonstrate the weakness in Plaintiffs’

argument, their construction of the statute contradicts industry practice as well as other ILSA

provisions. The Real Estate Board of New York represents that, as in other jurisdictions, it is

common in New York for sponsors to offer units for sale and to enter into purchase agreements

for those units prior to the filing of the condominium declaration. Real Estate Bd. of N.Y. Br. at

11. And because a condominium declaration ordinarily cannot be filed until new tax lot numbers

are assigned to each unit, which can only occur once construction is complete, see N.Y. Real

Prop. L. § 339-p, buyers often will execute purchase agreements before the declaration is

recorded, i.e., prior to completion of the development. Plaintiffs’ interpretation would prohibit

this common and long-standing practice. If, as Plaintiffs urge, the description of the lot must be

in a form acceptable for recording the deed, then a purchase agreement for a unit could be

executed only after construction was finished because it is only at that point that the declaration

would be recorded, and thus that the “liber, page and date of recording of the declaration”—

required for a deed, see N.Y. Real Prop. L. § 339-o—would be obtainable. Nothing in ILSA

suggests that Congress intended this outcome. To the contrary, other provisions of the statute

confirm that Congress was aware of the practice of pre-completion sales and contemplated that

the description of a unit required under § 1703(d)(1) may not be adequate for conveyance.

       For example, ILSA distinguishes explicitly between a “subdivision” and a “lot,” defining

the former as “land which . . . is divided or is proposed to be divided into lots . . . for the purpose



                                                  13
        
of sale or lease as part of a common promotional plan.” 15 U.S.C. § 1701(3). The statute also

requires that in the statement of record filed with CFPB, the sponsor must include “copies of the

deed or other instrument establishing title to the subdivision,” “a legal description of, and a

statement of the total area included in, the subdivision,” and “a map showing the division

proposed and the dimensions of the lots to be covered by the statement of record and their

relation to existing streets and roads.” 15 U.S.C. §§ 1704(a), 1705(2), 1705(8). Two

conclusions flow from these provisions. First, that a subdivision is defined as land that “is

divided or is proposed to be divided into lots . . . for the purpose of sale” suggests that Congress

recognized that the lot a purchaser contracts to buy may or may not exist at the time the contract

for sale is executed. And because a lot may merely be “proposed” and not yet in existence at the

time the contract is executed, Congress understood that the description of the lot in the purchase

agreement may not be in a form acceptable for recording a deed since, by definition, conveyance

of the lot would be impossible under such circumstances. Second, that the statement of record

must include a “legal description” of the subdivision (i.e., one “made by reference to a

government survey, metes and bounds, or lot numbers of a recorded plat,” Black’s Law

Dictionary § 18(c) (9th ed. 2009)), but that a lot, on the other hand, can be identified based only

on its “dimensions” and its “relation to existing streets and roads,” confirms that Congress

understood that an individual lot would not be amenable to the same type or extent of description

as the larger subdivision of which it was a part.5 For these reasons, we decline to adopt


                                                                   
5
  Because 15 U.S.C. § 1703(d)(1) is unambiguous, we need not rely on the agency’s
implementing regulations. See Lopez v. Terrell, 654 F.3d 176, 181 (2d Cir. 2011) (affirming the
well-established rule that under Chevron, U.S.A., Inc. v. Natural Resources Defense Council,
Inc., 467 U.S. 837, 842-43 (1984), deference to the agency’s interpretation is warranted only if
the statute is ambiguous). That those regulations undermine Plaintiffs’ construction of the statute
is nevertheless significant. Among other things, HUD requires that the property report, which
the sponsor is required to provide to all potential purchasers, must indicate whether the “plats
                                                                      14
        
Plaintiffs’ construction of 15 U.S.C. § 1703(d)(1). By its plain language, the description of the

lot need not be equivalent to the type of description required to convey the unit.

       Having rejected Plaintiffs’ interpretation, we arrive at our ultimate inquiry: whether

under 15 U.S.C. § 1703(d)(1) the actual description of the lot provided in the Agreement was in a

form acceptable for recording. Defendants urge that the description here satisfied ILSA because

the description was sufficiently detailed to be in a form acceptable for recording under New

York law. They observe that the Agreement identified the apartment Plaintiffs purchased as Unit

20A; that the Plan attached to the Agreement delineated Unit 20A on the condominium’s floor

plans and contained a specific floor plan of that particular unit; and that the unit’s floor plan

indicated the dimensions and locations of the rooms and windows, the location of the unit within

the building, and the direction the unit faced. Plaintiffs do not argue that this description is

                                                                                                                                                                                                      
                                                                                                                                                                                                      
covering the lots in th[e] Report [have] been recorded,” 24 C.F.R. § 1710.109(g)(1)(ii), and if
they have not, the report must state whether “the description of the lots given in th[e] Report [is]
legally adequate for the conveyance of land in the jurisdiction where the subdivision is located,”
id. Significantly, if the description is not sufficient for conveyance, the sponsor must “include a
statement [in the Report] to the effect that the description of the lots is not legally adequate for
the conveyance of the lots and that it will not be until the plat is recorded.” Id. Similar to the
statutory language, therefore, HUD’s regulations confirm that the agency, like Congress,
understood that the description of a lot in the purchase contract may not—and indeed, need not—
be adequate for conveyance of the unit. Here, the Sponsor complied fully with these regulatory
requirements. The property report Plaintiffs received stated explicitly:

                     NEITHER THE FLOOR PLANS NOR THE DECLARATION
                     HAVE BEEN SUBMITTED TO THE [REAL PROPERTY
                     ASSESSMENT BUREAU OF THE CITY OF NEW YORK].
                     UNTIL THE FLOOR PLANS ARE FILED AND THE
                     DECLARATION IS RECORDED THE DESCRIPTION OF
                     THE UNITS IS NOT LEGALLY ADEQUATE FOR THE
                     CONVEYANCE OF THE UNITS. THEREAFTER EACH
                     UNIT WILL BE LEGALLY DESCRIBED BY REFERENCE
                     TO ITS UNIT AND TAX LOT NUMBER AS SET FORTH IN
                     THE RECORDED DECLARATION AND FILED FLOOR
                     PLANS.

J.A. 107 (bolding and capitalization in original).
                                                                                    15
        
inadequate, nor do they challenge Defendants’ assertion that if set forth in an appropriate

instrument, the description could be recorded. Rather, Plaintiffs’ sole contention is that the

description in the Agreement is inaccurate, and for that reason, fails to satisfy § 1703(d)(1). We

disagree.

       Plaintiffs rely on an inconsistency between the Draft Declaration incorporated by

reference in the Agreement and the actual declaration filed by the Sponsor in February 2009.

They note, in particular, that the former stated that parcel one of the proposed Brompton

condominium—which was erected on three existing parcels of real property—would occupy

only the “volume of space . . . which lies above the horizontal plane having elevation 90.52 feet”

above ground level, whereas the latter indicated that the Brompton would occupy all of the space

in that parcel that lay above and below that same horizontal plane. J.A. 165, 179-83. Although

our review of the record confirms this inconsistency, it is immaterial. At most, the variance

Plaintiffs identify is a clerical error. Indeed, other documents included in the Plan make clear

that the Brompton would occupy all of the space in the parcel in question. Moreover,

satisfaction of § 1703(d)(1) turns on the adequacy of the description of the individual lot, not the

subdivision as a whole. Because Plaintiffs’ twentieth floor apartment was not part of the ground-

level area omitted from the description of the Brompton provided in the Draft Declaration, any

misidentification of the building had no effect on the description of Plaintiffs’ unit.

       In the absence of any tenable argument suggesting otherwise, we conclude that the

description of the lot in the Agreement was in a form acceptable for recording, thus complying

with 15 U.S.C. § 1703(d)(1). Indeed, Plaintiffs altogether fail to identify any material

information omitted from the description provided by the Sponsor in the Agreement that, by their

account, would have made the description otherwise unacceptable for recording. In this respect,



                                                 16
        
therefore, we emphasize again that the Agreement contained a copy of the Draft Declaration.

And while that document was not yet recorded at the time the Agreement was executed, because

construction of the Brompton was ongoing, the Draft Declaration contained all of the descriptive

information required under state law to create the condominium.6 See N.Y. Real Prop. L. § 339-

n. For this reason, the description provided to Plaintiffs in the Agreement was undoubtedly “in a

form acceptable for recording,” because as the record demonstrates, it was that description that

was ultimately recorded. Plaintiffs’ claim for revocation of the Agreement under § 1703(d)(1) is

thus unavailing.

         ii.           Section 1703(d)(3)

         Alternatively, Plaintiffs assert that the Agreement is revocable under ILSA because the

liquidated damages clause violates 15 U.S.C. § 1703(d)(3). That section provides that a contract

for the sale or lease of a lot can be revoked within two years of the signing date if the contract


                                                                     
6
    Under New York law, a condominium declaration must contain, inter alia:

                       2. Description of the land on which the building and
                       improvements are or are to be located.

                       3. Description of the building, including the location of the
                       building by reference to fixed monuments or tax map parcel data,
                       stating the number of stories, basements and cellars, the number of
                       units and the principal materials of which it is or is to be
                       constructed.

                       4. The unit designation of each unit, and a statement of its
                       location, approximate area, number of rooms in residential areas,
                       and common element to which it has immediate access, and any
                       other data necessary for its proper identification.

                       5. Description of the common elements and a statement of the
                       common interest of each unit owner.

N.Y. Real Prop. L § 339-n. Here, the Draft Declaration, which was incorporated by reference in
the Agreement, contained all of this required information.
                                                                        17
          
fails to indicate that in the event of the purchaser’s default or breach, the seller can retain only

the greater of (a) 15% of the purchase price of the lot, excluding interest owed, or (b) the

damages incurred by the seller for the purchaser’s default. 15 U.S.C. § 1703(d)(3). Here,

section 12(b) of the Agreement stated that if Plaintiffs defaulted, the Sponsor could elect to

cancel the Agreement and “as its sole remedy, shall have the right, subject to the provision of

Section 12(d) below, to retain, as and for liquidated damages, the Deposit.” J.A. 74 (emphasis

added). Section 3.1 of the Agreement provided that the “Deposit” consisted of the two initial

payments of $340,000, totaling $680,000, or 20% of the purchase price. Section 12(d) of the

Agreement—which, as indicated, was referenced explicitly in Section 12(b)—clarified:

               Notwithstanding the foregoing, if and only to the extent that the
               sale of the Residential Units is not exempt from the provisions of
               the Interstate Land Sales Full Disclosure Act, the amount of the
               Deposit to be retained by Sponsor upon Purchaser’s [default] . . .
               will be the greater of (i) fifteen percent (15%) of the Purchase
               Price (excluding any interest owed) or (ii) the amount of damages
               incurred by Sponsor due to the default.

Without question, therefore, section 12(d) of the Agreement made clear that, to the extent the

Agreement was subject to ILSA, in the event of Plaintiffs’ default the amount the Sponsor could

retain as liquidated damages was 15% of the purchase price or actual damages incurred,

whichever was greater.

       Plaintiffs concede, as they must, that in light of section 12(d), the Agreement was

consistent with 15 U.S.C. § 1703(d)(3). They assert, nonetheless, that the “deceptive”

phraseology of sections 12(b) and 12(d) of the Agreement failed to apprise them of their rights,

thus violating ILSA. We reject this argument as unfounded. The language of the contract is

clear: insofar as ILSA applies, the liquidated damages for Plaintiffs’ breach shall be capped at

the greater of 15% of the total purchase price or actual damages as a result of the default. Even



                                                  18
        
if we had any doubt on this point (and we do not), Plaintiffs’ argument is, in the end, purely

academic. Under the 2008 amendment to the Agreement, the second $340,000 installment,

comprising the second half of the deposit, was divided into two payments of $170,000, of which

Plaintiffs paid only the first. Their actual deposit, therefore, was $510,000—namely, 15% of the

purchase price—and the Defendants have not sought damages in excess of that amount.

                                         CONCLUSION

       For the foregoing reasons, we conclude that the purchase agreement is consistent with 15

U.S.C. § 1703(d)(1) and (3), and thus Vasilis Bacolitsas and Sofia Nikolaidou’s claim for

revocation of the agreement under ILSA fails as a matter of law.

       We therefore REVERSE the judgment of the district court and REMAND with

instructions to enter judgment for Defendants. Given this disposition, we DISMISS the appeal in

Docket No. 10-5230-cv as moot.




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