As always, case law adds additional clarification, or sometimes more confusion.
As mentioned above, the law regarding TILA is comprised of three parts:
- TILA, found at 15 USC §§1601-1693r;
- Reg Z (the implementing regulations), found at 12 CFR pt 226; and
- Official Staff Commentary, found at Supp I of Reg Z.
In many areas, Reg Z fleshes out the meaning of TILA, and the Commentary fleshes out the meaning of Reg Z. If you are doing research in this area of law, you must look to all three components. An example of the interrelationship is as follows:
Title 15 USC §1602(h) defines "consumer": The adjective "consumer," used with reference to a credit transaction, characterizes the transaction as one in which the party to whom the credit is offered or extended is a natural person, and the money, property, or services which are the subject of the transaction are primarily for personal, family, or household purposes. Regulation Z §226.2(a)(11) defines "consumers": [A] cardholder or a natural person to whom consumer credit is offered or extended. However, for purposes of rescission under §§226.15 and 226.23, the term also includes a natural person in whose principal dwelling a security interest is or will be retained or acquired, if that person's ownership interest in the dwelling is or will be subject to the security interest.
Official Staff Commentary §226.2(a)(11) states:
1. Scope. Guarantors, endorsers, and sureties are not generally consumers for purposes of the regulation, but they may be entitled to rescind under certain circumstances and they may have certain rights if they are obligated on credit card plans.
2. Rescission Rules. For purposes of rescission under §§226.15 and 226.23, a "consumer" includes any natural person whose ownership interest in his or her principal dwelling is subject to risk of loss. Thus, if a security interest is taken in A's ownership interest in a house which is A's principal dwelling, A is a consumer for purposes of rescission, even if A is not liable, either primarily or secondarily, on the underlying consumer credit transaction. An ownership interest does not include, for example, leaseholds or inchoate rights, such as dower.
3. Land Trusts. Credit extended to land trusts, as described in the commentary to §226.3(a), is considered to be credit extended to a natural person for purposes of the definition of consumer.
III. What Every Real Estate Attorney Should Know About TILA
IV. The Recission Process: The Law and Reality
V. Conclusion
