In late 2008, the real estate sky had started to fall and fall quickly. As a result of the loss of financing and wages, many purchasers in contract to buy a unit in a newly constructed building were either no longer able or willing to close on their units. To make matters worse, the credit markets had been greatly curtailing the flow of money into the hands of developers from purchasers. In March 2008, one of the last outposts of lending, Fannie Mae and Freddie Mac, put the brakes on loans to newly constructed buildings by requiring sales of at least 70 percent of a building’s units in order for its buyers to obtain a loan.
A prominent magazine noted Adam Leitman Bailey as the real estate attorney, “credited with being the first lawyer in New York City to use the ILSA provision.” Although this policy later changed to 50 percent and “sold” became “in contract” for most lenders’ purposes, the perfect real estate storm became a hurricane when many developers no longer had the capital to deliver the building as promised in the marketing materials; Engineers found serious problems with many structures including in some cases the failure to build in accordance with fire prevention protocols and materials.
Thousands of purchasers turned to Adam Leitman Bailey, P.C. to find them some way to rescue them from financial ruin. Turning to a forgotten federal statute called the Interstate Land Sales Full Disclosure Act, Adam Leitman Bailey, P.C. discovered a way to void the contracts of sales for buildings over 100 units. Adam Leitman Bailey, P.C. assisted almost a thousand purchasers in closing on these homes at discounted prices or obtaining a refund of their deposits. The Wall Street Journal quoted a prominent New York developer’s attorney calling these holdings a “game changer” affecting hundreds of newly constructed buildings nationwide. Another prominent magazine noted that Adam Leitman Bailey, “pioneered the use of the ILSA provision to get buyers out of contracts in the wake of the financial crisis.”
Adam Leitman Bailey is credited as being the first lawyer in New York City to use the ILSA provision to get buyers out of contracts in the wake of the financial crisis.