[Congressional Bills 118th Congress]
[From the U.S. Government Publishing Office]
[S. 3720 Introduced in Senate (IS)]
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118th CONGRESS
2d Session
S. 3720
To amend the Consumer Credit Protection Act to provide for additional
requirements for land installment contract transactions.
_______________________________________________________________________
IN THE SENATE OF THE UNITED STATES
February 1, 2024
Ms. Smith (for herself and Ms. Lummis) introduced the following bill;
which was read twice and referred to the Committee on Banking, Housing,
and Urban Affairs
_______________________________________________________________________
A BILL
To amend the Consumer Credit Protection Act to provide for additional
requirements for land installment contract transactions.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Preserving Pathways to Homeownership
Act of 2024''.
SEC. 2. LAND INSTALLMENT CONTRACTS.
The Consumer Credit Protection Act (15 U.S.C. 1601 et seq.) is
amended by adding at the end the following:
``TITLE X--LAND INSTALLMENT CONTRACTS
``Sec. 1001. Findings and purposes
``(a) Findings.--Congress finds the following:
``(1) Land installment contracts, when used to purchase a
home, are a form of consumer credit transaction under the Truth
in Lending Act (15 U.S.C. 1601 et seq.) in that the contracts
create a debt, which is the purchase price, and defer the
payment of the debt.
``(2) The lack of recordation of land installment contracts
in real estate records subjects buyers to the risk of other
creditors superseding their interest in the land despite the
extensive investment of the buyer in the home.
``(3) The frequency of use of land installment contracts
varies by region. States differ in treatment of how the
contracts are recorded and the use of forfeiture and
foreclosure to terminate the contracts. Buyers, therefore, are
afforded different protections because of the location of the
property they purchase, making this an issue that Congress must
address.
``(4) Land installment contracts involve interstate
commerce because credit is often extended across State lines by
the sellers or to the sellers to finance the acquisition of the
home in order to offer it for sale through a land installment
contract. Buyers entering into land installment contracts are
frequently solicited over the phone, through the mails, through
internet advertisements, and through other electronic
communications. Buyers use interstate commerce to enter into
the transaction, to make payments on the transaction, and to
obtain parts and services required to make repairs to the home
as contemplated by the transaction.
``(b) Purposes.--The purposes of this title are--
``(1) to ensure basic consumer protections in land
installment contract transactions to ensure that buyers have
their interests in the home protected from other creditors or
claimants in the real estate market; and
``(2) to protect consumers against unfair forfeitures of
equity after making payments through a consumer credit
transaction.
``Sec. 1002. Definitions
``In this title:
``(1) Covered land installment contract transaction.--The
term `covered land installment contract transaction' means a
sale of residential real property involving a land installment
contract, if the residential real property has not been the
principal place of residence of the seller during the preceding
2 years.
``(2) Land installment contract.--The term `land
installment contract' means an agreement under which--
``(A) a seller agrees to sell an interest in real
property to a purchaser;
``(B) the purchaser agrees to pay the purchase
price in installments; and
``(C) the seller retains title to the real property
as security for the obligation of the purchaser under
the agreement.
``(3) Seller.--The term `seller' means--
``(A) an individual or entity selling an interest
in residential real property;
``(B) any party related to the seller, as defined
by section 267(b) of the Internal Revenue Code of 1986;
and
``(C) any assignee or transferee of a seller not
described in subparagraph (B).
``Sec. 1003. Governance of land installment contract transactions
``(a) In General.--The States shall, not later than 2 years after
the date of enactment of this title, enhance consumer protection for
covered land installment contract transactions by enacting the
requirements described in subsections (b) and (c).
``(b) Recordation.--
``(1) In general.--The seller in a covered land installment
contract transaction shall record the executory contract with
the office where deeds are recorded not later than 5 days after
the date on which the contract is executed.
``(2) States.--
``(A) In general.--The States shall, by law
(including regulations) deter noncompliance with the
recordation requirement by--
``(i) prohibiting the seller from
compelling performance of the land installment
contract or exercising remedies pursuant to the
contract if the contract is not recorded in
accordance with paragraph (1);
``(ii) providing the buyer the right to
rescind the land installment contract and
receive a refund for any payments made to the
seller in connection with the land installment
contract transaction;
``(iii) providing that any violation of the
requirements imposed in compliance with this
paragraph shall give rise to liability in the
same manner and by the same means as under
paragraphs (1) and (2) of section 140(a) of the
Truth in Lending Act (15 U.S.C. 1640(a)); and
``(iv) providing authority to enforce
compliance with the recordation requirement to
an appropriate enforcement body.
``(B) Additional penalties for noncompliance.--
Nothing in subparagraph (A) shall prevent a State from
imposing additional penalties for noncompliance if the
penalties are greater than the potential harm a
purchaser may suffer, or the gain a seller may realize,
as a result of the failure of the seller to record a
contract in accordance with paragraph (1).
``(c) Protection of Purchaser's Equity.--If a purchaser defaults,
the seller may liquidate the interest of the purchaser in the property
pursuant to the residential mortgage foreclosure law of the State,
including all notice and curative requirements therein. The seller may
not enforce the remedy of rescission or forfeiture and no such remedy
within a land installment contract shall be binding on the purchaser.
``(d) Regulations.--If the Director of the Bureau of Consumer
Financial Protection determines that a State does not have the
requirements described in subsections (b) and (c) in effect by law
(including regulations) on the date that is 2 years after the date of
enactment of this title, the Director shall adopt rules applicable to
that State that achieve the purposes of subsection (a) that are
consistent with the standards adopted in the States that have the
requirements of subsections (b) and (c) in effect. The Director may
extend the deadline under this subsection for not more than 1 year if a
State has shown a good faith effort towards implementation. The
Director may promulgate regulations to monitor State compliance with
this section.
``(e) Applicability.--The requirements described in subsections (b)
and (c) shall only apply to covered land contract transactions entered
into after such requirements are in effect by law (including
regulations).''.
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