In August 2024, Pennsylvania made some important updates to its real estate laws through Act 52. If you’re buying or selling property in Pennsylvania, especially if you’re dealing with wholesale transactions, these changes might affect you. Let’s break down what’s new and how it impacts you as a consumer.
Previously, real estate laws in Pennsylvania didn’t really address the concept of “wholesaling”. Now, in addition to “wholesale transaction” being defined, new amendments were enacted so that terms like “broker” and “salesperson” now include those working in wholesale deals. So, if you’re dealing with someone who is buying and selling property interests without owning the property themselves, they are covered under these definitions. To clarify, the law now defines a “wholesale transaction” to be the undertaking to promote the sale, exchange, or purchase of an equitable interest in residential property with the intent to assign, sell or otherwise transfer the interest for a fee, commission, or other related monetary consideration without having taken title as the owner of record.
One of the biggest changes is the new cancellation right for consumers in wholesale transactions. Consumers may cancel until the 30th day after they have signed the agreement or until the property is officially transferred, whichever comes first. Additionally, if the agreement is cancelled within this period, there is no penalty.
To help consumers make an informed decision, the new law requires specific information to be included in any wholesale transaction agreement:
- The agreement must clearly state that it’s a wholesale deal where the person you’re dealing with doesn’t own the property.
- You have the right to get the property appraised, consult with a different real estate professional, or seek legal advice before or after signing the agreement.
- The agreement must inform you of your right to cancel the agreement up until the 30th day after signing or until the property is transferred, whichever happens first. The cancellation must be done through certified mail or other reliable methods. Once you have cancelled properly, the seller or broker must acknowledge that the agreement is void and ensure that any payments are returned.
- After cancellation, all payments you’ve made must be refunded within 10 business days. Additionally, any gifts or prizes received as part of the deal do not have to be returned.
These updates were made to protect consumers, especially those involved in wholesale transactions where the seller doesn’t own the property. By giving consumers clear rights and requiring detailed disclosures, the aim was to make real estate dealings more transparent and fair. If you are involved in a real estate transaction in Pennsylvania, make sure that any agreement is reviewed by one of our real estate attorneys BEFORE you sign.