New Notice Requirements for Wholesaling in Maryland
Understanding Wholesaling in Maryland
Wholesaling occurs when a person enters into a contract to purchase property and then assigns that contract to another buyer for a fee, rather than closing on the property themselves.
In these transactions, the wholesaler holds an equitable interest—the right to purchase the property—but not legal title. This type of transaction has become common in Maryland’s real estate market, particularly among investors seeking to facilitate sales without directly taking ownership.
Recent updates to Maryland law now impose new requirements to protect both property owners and buyers by ensuring all parties understand the wholesaler’s role and limitations.
Written Notice of Equitable Interest
Under Maryland’s new law, any individual or entity selling or assigning a real estate purchase contract must provide written notice stating that they hold only an equitable interest in the property and may not be able to convey title directly.
This written disclosure must be given before closing to both the property owner and the assignee (the end buyer).
If this notice is not provided:
The property owner may rescind the contract without penalty before closing.
The assignee is entitled to a refund of any deposit paid on the assignment.
This requirement helps maintain transparency and ensures that buyers and sellers are aware of the wholesaler’s limited role in the transaction.
Remedies for Noncompliance
Failure to comply with these written notice requirements can have serious consequences. If a wholesaler does not provide proper notice:
The property owner may cancel or rescind the agreement without penalty before settlement.
The assignee may recover all deposits or assignment fees paid.
In addition to potential financial losses, noncompliance could lead to disputes or litigation between the involved parties.
Real estate professionals operating in Berlin, MD and Ocean City, MD should ensure that all assignment contracts are reviewed for compliance with this new law.
Ensuring Transparency in Real Estate Transactions
The purpose of Maryland’s updated wholesaling law is to promote transparency in real estate transactions. By requiring notice of equitable interest, the law clarifies the wholesaler’s position in the deal.
It ensures that:
The seller understands that the wholesaler does not yet hold legal title to the property.
The buyer understands that they are purchasing the right to buy, not the property itself, until closing.
All parties are aware of their rights, risks, and responsibilities throughout the process.
This approach protects both consumers and professionals and helps prevent misunderstandings that could otherwise lead to contract disputes.
Legal Assistance for Real Estate and Landlord-Tenant Matters
Compliance with Maryland’s real estate and wholesaling laws requires careful attention to contract terms and disclosures. Whether you are a property owner, investor, or tenant in Berlin, MD or Ocean City, MD, our law firm provides comprehensive legal services in the following areas:
Real estate contracts and conveyances
Assignment and transfer of equitable interests
Real estate settlements and closings
Landlord-tenant law and property disputes
Our team helps clients understand and meet all of Maryland’s legal requirements related to real estate transactions.
Learn more about our services:
Why Compliance Matters in Berlin, MD, and Ocean City, MD
With the continued growth of property investments and developments across Maryland’s Eastern Shore, including Berlin and Ocean City, compliance with real estate laws is more important than ever.
The new notice requirement prevents confusion over who holds legal versus equitable interests and reduces the risk of unenforceable contracts.
Property owners and wholesalers who fail to provide or request written notice risk contract rescission, refund obligations, or exposure to civil liability. Consulting a qualified Maryland real estate attorney ensures that transactions are properly structured and legally sound.
Frequently Asked Questions about Wholesaling in Maryland
What is wholesaling in Maryland real estate?
Wholesaling is the process of entering a purchase contract for real estate and then assigning that contract to another buyer for a fee, without completing the closing personally.
What does “equitable interest” mean?
An equitable interest gives a party the legal right to purchase property, but not ownership until the property is actually transferred at settlement.
What written notice is required under the new law?
The wholesaler must provide written notice that they hold only an equitable interest and may not be able to directly convey title.
What are the penalties for failing to provide notice?
The property owner can rescind the contract before closing, and the assignee (buyer) is entitled to a full refund of any deposit or assignment fee.
Do these laws apply in Berlin and Ocean City, MD?
Yes. The law applies statewide, including to transactions conducted in Berlin, MD, Ocean City, MD, and throughout Maryland.
How can a real estate attorney assist with compliance?
A real estate attorney can review contracts, ensure notice requirements are met, and protect your interests in wholesaling or property assignments.
If you are involved in wholesaling, property assignments, or real estate transactions in Berlin, MD or Ocean City, MD, Peter S. Buas, Esq. provides trusted legal guidance to help you comply with Maryland’s new wholesaling notice requirements and other real estate laws.
Peter S. Buas, Esq. represents clients in a wide range of real estate and landlord-tenant matters, including:
Real estate contracts and conveyances
Assignment and transfer of equitable interests
Landlord-tenant disputes and lease compliance
Real estate settlements and closing representation
With extensive experience and a deep understanding of Maryland real estate law, Peter S. Buas offers personalized legal services tailored to your unique situation.