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Committee releases bill to license wholesalers and give sellers a 21-day cancellation right
Summary
SB 201, creating licensing and consumer protections for real-estate wholesaling and a 21-day right to cancel wholesale agreements plus disclosure and increased recovery limits from the real-estate guarantee fund, was released from committee after testimony from realtors, investors, buyers, and victims of undisclosed wholesaling.
The committee considered Senate Bill 201, which defines real-estate wholesaling, requires wholesalers who operate in the business to hold a license, mandates disclosure that a contract may be resold, and gives sellers a 21-day right to cancel a wholesale agreement. The bill also increases the maximum recovery available from the real-estate guarantee fund for consumer harm and raises the fund's minimum balance.
Committee members asked whether the 21-day cancellation window would impede settlement-related work such as title searches and inspections. Christie Steele of the Delaware Association of Realtors explained the 21 days (about 15 business days) was chosen to give consumers time to consult an attorney, obtain an appraisal, or seek other advice before deciding to terminate a contract.
Stakeholders presented competing operational concerns. Bob Warburton of the Delaware Real Estate Investors Association said reasonable regulation could curb bad actors but urged shortening the cancellation period to five days to avoid delaying closings and added costs for sellers and closing attorneys. Christie Steele and representatives of the Realtors' association described instances where undisclosed wholesaler involvement and powers of attorney clouded title and harmed buyers.
A virtual commenter, Tanya Haley, described spending 10 weeks trapped in a transaction that could not close due to undisclosed wholesaling and asserted the seller had been subject to undisclosed contracts and a seller power of attorney, presenting that experience as a rationale for stronger disclosure and a cancellation period.
After testimony, the committee moved and seconded to release SB 201; the chair called the roll, confirmed the bill had enough votes, and the measure was released from committee. The committee adjourned following the vote.
Stakeholders indicated continued refinement of the bill's operational details may be necessary to balance consumer protections with transaction efficiency.
