Bulletin: PA2024002

Dear Associates:

Wholesaling is a common practice nationwide. Real estate wholesaling involves buying a property, then quickly selling it to another buyer without making any major improvements or repairs. The point is to profit by contracting to buy a property for a low price, then passing the deal on to another investor willing to pay more.

Wholesaling has been somewhat restricted in Pennsylvania by virtue of the Pennsylvania’s Real Estate Licensing and Registration Act (RELRA) (63 P.S. § 455.101 et seq). In order to clarify certain definitions and require wholesaling parties to have real estate licenses, by necessitating that they make certain disclosures, and by affording appraisal and cancellation protections to buyers and sellers, the Pennsylvania legislature adopted Act 52 of 2024 on July 8, 2024, known as the Wholesale Real Estate Transaction Transparency and Protection Act (“Act 52”).

Act 52 becomes effective January 4, 2025.

Some of the major components of Act 52 are as follows:

1. The definition of “Broker” is amended to include, “Any person who, whether for the person or for another, engages or attempts to engage in a wholesale transaction.”

2. The definition of “Salesperson” is expanded to include any person employed by a licensed real estate broker to……. engage or attempt to engage in a wholesale transaction for or on behalf of such real estate broker.

3. Defines “Wholesale Transaction” as, “Undertaking to promote the sale, exchange or purchase of an equitable interest or other interest in residential property with the intent to assign, sell or otherwise transfer the interest for a fee, commission or other valuable monetary consideration without having taken title as the owner of record of the interest.”

4. Defines “Residential property” as, “Real property located within this Commonwealth that consists of not less than one and not more than four residential dwelling units.”

5. Section 610 of Act 52 provides, among other rights, the following relating to a contract for a wholesale transaction:

a) A statement that the agreement or contract is for a wholesale transaction in which the licensee intends to assign, sell, or otherwise transfer the interest for a fee, commission, or other valuable monetary consideration without having taken title as the owner of record of the interest.

b) A statement that the consumer has the right to obtain an appraisal of the property from a real estate appraiser.

c) A statement that the consumer has the right to cancel the agreement or contract until midnight of the 30th day after the date when the consumer executed the agreement or contract, or until conveyance, whichever occurs first.

d) A statement that within ten business days after the receipt of a notice of cancellation, all payments of any kind made by the consumer shall be refunded to the consumer.

The full text of Act 52 is linked below.

Act 52

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