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Unfair and Deceptive Acts and Practices: 2.2.5.1.4 Isolated sale of real estate by owner

Although there is some disagreement,1083 a number of courts have ruled that, even where a UDAP statute generally applies to real estate sales, it does not apply to the isolated sale of real estate by a nonmerchant.1084 This should be viewed as an attempt to keep consumer-to-consumer sales transactions outside the UDAP statute’s scope, and not an attempt to exclude all real estate practices from the state’s coverage.1085 Even though a court ma

Unfair and Deceptive Acts and Practices: 2.2.5.1.5 Special consideration for manufactured home sales

UDAP coverage of manufactured home sales will likely depend not only on the wording of the UDAP statute, but also on the nature of the manufactured home sale and other state law. Even where a UDAP statute only applies to the sale of “goods,” there should be little question that a manufactured home purchased from a dealer on the dealer’s lot is covered, since a manufactured home is clearly a movable consumer good.1091

Unfair and Deceptive Acts and Practices: 2.2.5.2 Services, Construction Work, Personalty Related to Real Estate Are Covered

Many UDAP statutes are explicit in covering services relating to real estate.1094 This is so even if the statute does not apply to the sale of real estate.1095 Likewise, contracting for the construction of a home or an improvement to existing property is not a real estate purchase, but rather purchase of a service or a chattel, even if the construction work is affixed to the real estate.1096

Unfair and Deceptive Acts and Practices: 2.2.8.1 Pyramid Sales

An Ohio court finds a pyramid scheme to involve a consumer transaction, not a business investment, and therefore subject to the Ohio UDAP statute.1164 Similarly, the Seventh Circuit held that individuals who purchased a home-based business package that was alleged to be a pyramid scheme in disguise were consumers even though their goal was to make money.1165 Alabama holds that a pyramid sales scheme involves the sale of goods, and is thus covered under its UDAP statute.

Unfair and Deceptive Acts and Practices: 2.2.8.2 Franchises

The general scope provisions of many UDAP statutes are broad enough to encompass the sale of a franchise. Many apply to any trade or commerce, many specifically include the sale of an intangible or “any thing of value,” and a few specifically mention franchises or business opportunities.

Unfair and Deceptive Acts and Practices: 2.2.8.3 Securities Transactions

Whether a UDAP statute applies to securities transactions depends on a number of questions. First, does a security fall within the types of property and rights to which the UDAP statute applies? Second, does the securities transaction meet any requirement in the UDAP statute that the transaction be consumer-oriented or for personal, family, or household use? Third, is there an explicit exclusion for securities transactions? And, finally, even without an explicit exclusion, is the UDAP statute displaced by state securities laws?

Unfair and Deceptive Acts and Practices: 2.2.11.2 Out-of-State Residents

Unless the statute explicitly provides otherwise,1299 UDAP statutes apply to practices within the state that affect out-of-state consumers, since the state has an interest in deceptive acts within its own borders, even if the activities do not affect its citizens.1300 Nebraska’s UDAP statute makes this rule explicit, providing that it applies to transactions conducted wholly or partly within Nebraska against residents or non-residents.1301

Unfair and Deceptive Acts and Practices: 2.3.1.3 State Insurance Code Displacement of UDAP Applicability

A frequently litigated issue is whether a state UDAP statute applies to insurance practices where those practices are already regulated by the state insurance code, but where the UDAP statute does not explicitly exempt insurance companies. Insurers often argue that the state insurance statute prohibiting unfair and deceptive insurance practices (the UNIP statute)1397 displaces UDAP coverage.

Unfair and Deceptive Acts and Practices: 2.3.3.2 UDAP Statutes Exempting Specific Regulated Entities or All “Regulated Practices”

The most restrictive UDAP language excludes specific types of merchants, such as banks, insurance companies, or lawyers. Such language will be given effect.1635 Where “banks” are excluded, this has been held to apply to savings and loan associations.1636 An exclusion for financial institutions was interpreted to exempt not only a financial institution’s loan practices, but also its practices related to a lease.1637