Does Truth in Lending Act (TILA) apply to commercial loans? No. But what is a commercial loan?

Here is some general information on the TILA law. Commercial loans are not covered by TILA. But that is always not a easy question to figure out (is the loan commercial or is it a loan on the primary residence of the borrower). Here are a few ideas:

TIL is a remedial statute to be broadly construed to further the Congressional purpose of meaningful disclosure of credit terms. Rachbach v. Cogswell, 547 F.2d 502, 505 (10th Cir. 1976). Whether a transaction is primarily consumer or commercial in nature so as to be subject to this subchapter is a factual issue to be resolved by trier of fact by looking to transaction as a whole and purpose for which credit was extended. Gallegos v. Stokes, C.A.10 (N.M.) 1979, 593 F.2d 37. In a loan transaction in which the borrower uses his principal dwelling to secure the loan from the creditor, the Truth in Lending Act (TILA) provides the borrower with a right to rescind the transaction. Truth inLending Act, § 125(a), as amended, 15 U.S.C.A. § 1635(a). In re Webster, 300 B.R. 787 (Bankr. W.D. Okla. 2003).

15 U.S.C. § 1635(a) (emphasis added). The plain statutory text of § 1635 provides that a debtor’s right to rescind arises only when the loan transaction is secured by the debtor’s “principal dwelling.” Although TILA itself does not define a “principal dwelling,” Title 12 of the Code of Federal Regulations implementing TILA, known as Regulation Z, provides some guidance. *471 First, Regulation Z defines a “dwelling” as “a residential structure that contains 1 to 4 units, whether or not that structure is attached to real property.” 12 C.F.R. § 226.2(a)(19) (2007). Second, it provides that “[a] consumer can only have one principal dwelling at a time. Thus, a vacation or other second home would not be a principal dwelling.” 12 C.F.R. § 226 Supp. I, Section 226.2(a)(24)(3) (2007) (emphasis in original); see also Scott v. Wells Fargo Home Mortgage, Inc., 326 F.Supp.2d 709, 715 (quoting Scott v. Long Island Sav. Bank, 937 F.2d 738, 741 (2d Cir.1991)).