Senate committee considers bill to regulate real-estate wholesaling and boost consumer protections

Senate Bill 201, discussed by the Senate Banking, Business, Insurance and Technology Committee, would define and regulate wholesaling in residential real estate and add consumer protections intended to limit predatory assignments of contracts.

A committee member introduced the measure as an amendment to Title 24 that applies to 1–4 family residential properties. The presentation said wholesalers would be required to hold a real-estate license, provide mandatory disclosures (available in English, Spanish and Haitian Creole), and give sellers a 21-day right to rescind a wholesale agreement. The bill also would raise the Real Estate Guaranty Fund’s per-incident recovery limit from $25,000 to $50,000 and increase the fund’s minimum balance from $250,000 to $350,000.

Andrew Taylor, legal counsel to the Delaware Association of Realtors, said the Delaware Real Estate Commission would develop the required disclosure form and that wholesalers would be obligated to provide it to property owners. "That notice is basically to say to that owner of the property, hey, seriously consider this," Taylor said, describing the form’s purpose as encouraging owners to consult counsel, brokers or appraisers and to consider rescission rights.

Multiple representatives of the Delaware Association of Realtors urged the committee to advance SB 201 as a consumer-protection measure. Denise Foreman Gaines, president of the Delaware Association of Realtors, said wholesaling "has also been used to exploit vulnerable homeowners" and that sellers sometimes do not know their contract will be resold or that "large assignment fees are being extracted from their home equity." Christie Steele, a national and state association director, told senators the association was not opposed to wholesaling per se but wanted to curb predatory practices through licensing and supervision by the Delaware Real Estate Commission.

Committee members asked how common wholesaling is and whether the practice could be tracked in public records. Witnesses said deeds recorded at the recorder of deeds would not necessarily reveal wholesale assignments, but listing and broker data (MLS) could help researchers and the bill’s disclosures would increase transparency.

The transcript records robust questioning and public comment from industry witnesses but no formal committee vote on SB 201 during this meeting. At the end of the session the moderator said, "I'm sending the bill back around for signature," and entertained a motion to adjourn; the transcript ends before an adjournment vote is recorded.