Residential Property - Assignment of Contracts of Sale - Disclosure Requirements and Rescission
SB160 creates new disclosure and rescission rules for certain residential property transactions involving “wholesale buyers” and “wholesale sellers.” A wholesale buyer is defined as a person who contracts to buy owner-occupied residential property with the intent to assign the contract to another person for a fee, while a wholesale seller is a person who enters a contract without holding legal title and then assigns the equitable interest to another party. The bill requires written disclosure before a wholesale buyer enters a contract that the contract may be assigned, and requires written disclosure before a wholesale seller assigns a contract that the seller may not be able to convey title.
The bill also gives the owner of residential property a right to rescind, without penalty, a contract with a wholesale buyer or that buyer’s assignee or successor if the required notice was not provided and the contract is assigned. In the reverse situation, a buyer or assignee may rescind an assigned contract without penalty if a wholesale seller fails to provide the required notice, and the rescinding buyer or assignee is entitled to a refund of any deposit paid in connection with the assignment. The measure applies only to residential property, generally defined as property with four or fewer single-family dwelling units intended for human habitation, and does not apply to certain foreclosure-related sales.
In terms of state law, SB160 adds a new Section 10-715 to the Real Property Article and also amends the general contract-of-sale compliance provisions in Section 14-117 to make compliance with the new disclosure rules mandatory where applicable. It is prospective only and does not affect contracts executed before October 1, 2025. The practical effect is to regulate assignment-based real estate transactions more closely, especially in the residential “wholesaling” market, by increasing transparency and creating a statutory exit right when disclosures are not made.
The bill appears to have been broadly supported, passing both chambers unanimously in recorded third-reading votes. No committee transcript material was provided, but the vote history suggests little overt opposition in the legislative process. The overall sentiment reflected in the bill’s structure is consumer-protective, aimed at preventing surprise assignments and clarifying the rights of owners, buyers, and assignees in these transactions.
The main point of contention addressed by the bill is the practice of contract assignment in residential wholesaling, where one party may contract for a property without intending to close and instead sell the contract position to another buyer. The bill responds to concerns that sellers or assignees may not understand that the original contracting party lacks title or may be able to transfer the contract, and it balances that concern by requiring advance written notice and allowing rescission when notice is missing. The affected parties are homeowners selling owner-occupied residential property, wholesale buyers and sellers, assignees, and downstream purchasers in assignment transactions.
SB160 adds a new disclosure-and-rescission framework to Maryland’s Real Property Article for residential contract assignments, specifically targeting wholesaling transactions. It requires written notices by wholesale buyers and wholesale sellers, creates statutory rescission rights and deposit refunds when notice requirements are not met, and incorporates the new section into the list of provisions that residential contracts of sale must satisfy. The law applies prospectively to contracts executed on or after October 1, 2025.
The bill’s legislative history shows strong bipartisan or at least unanimous support, with recorded third-reading votes passing 45-0 in the Senate and 134-0 and 45-0 in the House-related votes shown. That voting pattern suggests the measure was viewed favorably and as a consumer-protection or market-clarity bill rather than a controversial policy change. No committee testimony was provided, but the absence of recorded opposition in the voting history indicates broad agreement on the need for the disclosures and rescission rights.
The central issue addressed by SB160 is the use of assignment contracts in residential real estate wholesaling, where a buyer may contract for a property and then assign the deal for a fee without ever taking title. Supporters of the bill appear to have been concerned that sellers, buyers, and assignees could be misled or left without clear remedies if the assignment structure was not disclosed. The bill resolves that concern by mandating written disclosure and allowing rescission without penalty when notice is not given, while also protecting downstream assignees by requiring refunds of deposits. No specific opposition is reflected in the available materials, but the regulated parties are wholesale buyers, wholesale sellers, and assignees who may face added compliance obligations and reduced flexibility.