II 118th CONGRESS 2d Session S. 3720 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.

1. Short title This Act may be cited as the Preserving Pathways to Homeownership Act of 2024 . 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: X Land installment contracts 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. 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). 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). .