[Congressional Bills 118th Congress]
[From the U.S. Government Publishing Office]
[S. 3720 Introduced in Senate (IS)]

<DOC>






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).''.
                                 <all>